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2022-05-05 23:49
FuelCell Energy, Inc (NASDAQ:FCEL) was trading more than 9% lower on Thursday, despite printing a bullish Marubozu candlestick on Wednesday, which suggested the stock should trade higher.
The big move in the general markets on Wednesday, caused by a bullish reaction to the Federal Reserve’s decision to raise interest rates by .5bps to combat soaring inflation, may have been a bull trap.
On Thursday, the S&P 500 opened lower and by press time had declined about 3.3%, pressuring individual securities to the downside. FuelCell didn’t fall below Thursday’s low-of-day, however, which has caused the stock to print an inside bar on the daily chart.
An inside bar pattern indicates a period of consolidation and is usually followed by a continuation move in the direction of the current trend.
An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar and each is called an "inside bar."
A double, or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.
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The FuelCell Chart: FuelCell’s inside bar leans bullish because the stock was trading higher in an uptrend before forming the pattern. FuelCell’s most recent higher low was printed May 2 at the $4.02 level and the most recent higher high was formed at $4.77 on Wednesday.
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