SQ: RSI, MOM, OBV bullish divergence on a monthly chart
The price of SQ has been making lower highs and lower lows, forming a descending channel pattern. However, the RSI, MOM and OBV indicators have been making higher lows, indicating that the selling pressure is weakening and that the buyers are gaining strength.
The RSI measures the momentum of the price movement, and a divergence occurs when the RSI moves in the opposite direction of the price. The RSI has been rising from 32.77 in July 2022 to 46.01 in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This suggests that the downward momentum is slowing down and that a reversal may be possible.
The MOM measures the rate of change of the price, and a divergence occurs when the MOM moves in the opposite direction of the price. The MOM has been rising from -19.23 in July 2022 to -1.69 in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This indicates that the rate of decline is decreasing and that a turnaround may be imminent.
The OBV measures the positive and negative flow of volume in a security over time, and a divergence occurs when the OBV moves in the opposite direction of the price. The OBV has been rising from 1.16B in July 2022 to 1.25B in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This implies that there is more accumulation than distribution of shares and that the demand is increasing.
All these indicators suggest that the stock may have bottomed and that a new uptrend may begin. However, the stock may face some resistance at the 200-week moving average, which is currently around $65. The stock may also experience some volatility and corrections along the way, as the market conditions and investor sentiment may change. Therefore, I would still be cautious and flexible, and use stop-loss orders and risk management techniques to protect my capital and limit my losses in case the stock does not behave as expected.
Trade active
Comment:
Good follow through on the weekly candle so far...
Comment:
We have breached resistance. Lot of room to run.
Comment:
79-80$ should provide some resistance. Be careful in this area.
Trade closed: target reached