Echo Energy Plc (ECHO.L) Money Flow Index Levels in Focus

The Money Flow Index of Echo Energy Plc (ECHO.L) this week has placed the shares on the radar as it nears the key 70 or 80 level.  At the time of writing the MFI is holding above 60 and trending higher for the name.  The Money Flow Index creates a ratio of Positive Money Flow and Negative Money Flow over time and scales it to a number between 0 and 100. The MFI value can be used to evaluate overbought and oversold conditions in a security the index moves above or below a certain reference level. Divergence between MFI and the price direction can also be indicative of a reversal. If price is trending higher and MFI is decreasing over that period, a market top may occur.

Many investors may have noticed that when the stock market has been running bullishly hot for quite some time, market tops can be a very busy place. Trading interest may be noticeably higher when the good times are rolling. This can be tricky because often times, prices may become inflated and somewhat overvalued. Traders will need to pay much more attention to what is going on at the tops of these bull runs. When interest is heightened, traders who got in at much better prices may be looking to unload the winners for quick profits. Doing the proper research can help clear out some of the fog that comes with an oversaturated market. Chartists will most likely be paying attention to price moves and trying to spot the next series of trends that develop. Spotting a trend earlier than the crowd may help the trader sell before the big drop or buy before the big rise. Learning how opportunities unfold and present themselves in the stock market may take a lot of time and effort to master. Professional traders are typically a few moves ahead of the novice and relatively naive trader. Getting to that next level should be on the mind of any dedicated trader or investor. Learning from past mistakes can make a huge difference in the future of the trader’s profits and psyche.

Investors may be trying to get an edge by following some additional technical levels for Echo Energy Plc (ECHO.L). In terms of Moving Averages, the 50-day is 2.72, the 200-day is at 3.96, and the 7-day is 2.96. Using a longer term moving average such as the 200-day may help block out the noise and chaos that is sometimes created by daily price fluctuations. In some cases, MA’s may be used as strong reference points for finding support and resistance levels. Employing the use of the moving average for technical equity analysis is still highly popular among traders and investors. The moving average can be used as a reference point to assist with the discovery of buying and selling opportunities.

Echo Energy Plc (ECHO.L)’s Williams Percent Range or 14 day Williams %R currently sits at -92.86. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. The Williams %R was developed by Larry Williams. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator.

Echo Energy Plc (ECHO.L) currently has a 14-day Commodity Channel Index (CCI) of -151.22. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.

Currently, the 14-day ADX for Echo Energy Plc (ECHO.L) is sitting at 18.37. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSI is currently at 46.09, the 7-day stands at 34.77, and the 3-day is sitting at 16.7.

As we move deeper into earnings season, investors may be trying to figure out how to best position the portfolio for the rest of the calendar year. Maybe things haven’t gone as well as planned in the first half of the year, and a few tweaks need to be made to bolster profits in the second half. Closely watching the earnings reports may be a good way to see what companies are getting things right, and what companies have some work to do. Many investors will take notice if a company posts a much larger earnings beat or miss than expected. Not only will the stock most likely become a bit more volatile, but overall interest may be heightened as investors try to piece together the puzzle and figure out why there was such a discrepancy between estimates and actuals. Once the dust settles and the picture becomes a little clearer, investors may be able to properly rotate in or out of a certain name or sector. Finding stocks that look good on paper but have fallen out of favor with certain investors may be a good place to start doing some further number crunching. Locating those overlooked sectors with growth potential might be a good way to uncover those stocks that are ready to make a run.   

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