Fishing resources

Continental Resources (CLR) Form a “Hammerhead Chart Pattern”: Time to Fish the Bottom? – November 8, 2021


Actions of Continental resources (CLR Free Report) have struggled in recent times and have lost 5.5% in the past week. However, a hammer chart pattern formed during its last trading session, which could mean that the stock has found support as the bulls are able to counter bears. So it could see a trend reversal down the road.

While the formation of a hammer pattern is a technical indication of approaching a bottom with potential exhaustion of selling pressure, the growing optimism of Wall Street analysts about the future earnings of this oil company and Independent gas is a strong fundamental factor improving the outlook for a trend reversal for the stock.

Understanding the hammer chart and the technique for the trader

It is one of the most popular price patterns in candlestick charts. A minor difference between the open and close prices forms a small candle body, and a larger difference between the day’s low and the open or close forms a long lower wick (or vertical line). Since the length of the lower wick is at least twice the length of the actual body, the candle looks like a “hammer”.

Simply put, in a downtrend, with absolute bear control, a stock usually opens lower than yesterday’s close, and closes lower again. On the day the hammer pattern forms, maintaining the downtrend, the stock hits a new low. However, after eventually finding support at the day’s low, some buying interest emerges, pushing the stock at the close of the session near or slightly above its open price.

When it occurs at the bottom of a downtrend, this pattern signals that bears may have lost price control. And, the bulls’ success in keeping the price from falling further indicates a potential trend reversal.

Hammer candles can occur over any time period – say one minute, daily, weekly – and are used by both short-term and long-term investors.

Like any technical indicator, the hammer chart template has its limitations. In particular, as the strength of a hammer depends on its placement on the chart, it should always be used in conjunction with other bullish indicators.

Here’s what increases the odds of a turnaround for CLR

An upward trend in earnings estimate revisions that CLR has witnessed in recent times can certainly be seen as a bullish indicator on the fundamental side. This is because empirical research shows that trends in earnings estimate revisions are strongly correlated with short-term stock price movements.

The consensus EPS estimate for the current year has increased 11.9% in the past 30 days. This means that Wall Street analysts covering CLR overwhelmingly agree on the company’s potential to report better earnings than they previously predicted.

If that is not enough, you should note that CLR currently has a Zacks Rank # 2 (Buy), which means it is in the top 20% of over 4,000 stocks which we rank based on trends in price revisions. BPA profit and surprise estimates. . And stocks with a Zacks # 1 or 2 rating typically outperform the market. You can see the full list of Zacks Rank # 1 (strong buy) stocks today here >>>>

Additionally, a Zacks Rank of 2 for Continental Resources is a more conclusive indication of a possible trend reversal, as Zacks Rank has proven to be an excellent timing indicator that helps investors identify precisely when the outlook for a business start to improve.