Fishing resources

Here’s why Pioneer Natural Resources (PXD) seems ripe for bottom fishing

Shares of Pioneer of natural resources (PXD) have been struggling lately and are down 10% in the past week. However, a hammer chart pattern formed in its last trading session, which could mean the stock has found support, with the bulls able to counter the bears. Thus, he could witness a trend reversal down the road.

While the formation of a hammer pattern is a technical indication of an approaching bottom with potential exhaustion of selling pressure, growing optimism among Wall Street analysts about this oil company’s future earnings and independent gas is a strong fundamental factor that improves the prospects of a trend reversal for the stock.

What is a Hammer Chart and how do I trade it?

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 daily 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 real body, the candle resembles a “hammer”.

Simply put, during a downtrend, with absolute control of the bears, a security typically opens lower than the previous day’s close, and closes lower again. On the day the hammer pattern forms, maintaining the downtrend, the stock hits a new low. However, after finally finding support at the day’s low, some buying interest is emerging, pushing the stock higher to close the session near or slightly above its open price.

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

Hammer candles can occur at any time – such as a minute, daily, weekly – and are used by both short-term and long-term investors.

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

Here’s what increases the chances of a turnaround for PXD

There has been an upward trend in earnings estimate revisions for PXD lately, which can certainly be seen as a bullish indicator on the fundamental side. This is because a positive trend in earnings estimate revisions generally translates into short-term price appreciation.

Over the past 30 days, the current year EPS consensus estimate has risen 28.9%. This means that sell-side analysts covering PXD overwhelmingly agree that the company will report better earnings than they previously predicted.

If that’s not enough, you should note that PXD currently has a Zacks Rank #1 (Strong Buy), which means it’s in the top 5% of over 4,000 stocks that we rank based on market trends. revisions to earnings estimates and EPS. surprises. And stocks with a Zacks rank of No. 1 or 2 generally outperform the market. You can see the full list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

Additionally, Zacks Rank has proven to be an excellent timing indicator, helping investors identify precisely when a company’s prospects are beginning to improve. Thus, for shares of Pioneer Natural Resources, a Zacks ranking of 1 is a more conclusive fundamental indication of a potential turnaround.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.