Here’s why Weave Communications, Inc. (WEAV) looks ripe for bottom fishing | Wbactive

A downward trend was evident in Weave Communications, Inc. (WEAV) lately. While the stock is down 8.4% over the past week, it could see a trend reversal as a hammer chart pattern formed in its most recent trading session. This could mean that the bulls were able to counter the bears to help the stock find support.

The formation of a hammer pattern is considered a technical indication of a bottom approaching with a probable easing in selling pressure. But that’s not the only factor in the stock’s favor. On the fundamental side, the strong consensus among Wall Street analysts in upgrading earnings estimates for this company raises its prospects for a trend reversal.

1 month candlestick chart for WEAVUnderstanding the Hammer chart and the technique of trading it

This is one of the most popular price patterns on the candlestick chart. A small difference between the opening and closing prices forms a small candle body, and a larger difference between the daily low and the opening or closing price forms a long lower wick (or vertical line). Since the lower wick is at least twice as long as the real body, the candle resembles a “hammer”.

Simply put, during a downtrend when bears are in absolute control, a stock typically opens lower and closes lower compared to the previous day’s close. On the day when the hammer pattern forms and maintains the downtrend, the stock makes a new low. However, after eventually finding support at the low of the day, a certain level of buying interest arises, driving the stock higher to close the session near or slightly above its opening price.

When it occurs at the end of a downtrend, this pattern signals that the bears may have lost control of the price. And the bulls’ success in halting the further decline in price suggests a possible trend reversal.

Hammer candles can occur on any time frame – e.g. B. one 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. Since the strength of a hammer depends particularly on its placement on the chart, it should always be used in conjunction with other bullish indicators.

Here’s what makes trend reversal more likely for WEAV

An uptick in earnings estimate revisions that WEAV has been observing lately can certainly be viewed as a bullish indicator on the fundamental side. That’s because empirical research shows that trends in earnings estimate revisions are highly correlated with short-term stock price movements.

Consensus year-to-date EPS estimate is up 5.5% over the last 30 days. That means Wall Street analysts covering WEAV are largely in agreement that the company may have forecast better earnings than previously.

If that’s not enough, note that WEAV currently has a Zacks rank of #2 (Buy), meaning it is in the top 20% of more than 4,000 stocks that we have covered based on trends in earnings estimate revisions and rank EPS surprises. And stocks with a Zacks rank of #1 or #2 usually outperform the market. You can see the full list of today’s Zacks stocks ranked #1 (Strong Buy) here >>>>

Additionally, a Zacks rank of 2 for Weave Communications, Inc. is a more powerful indicator of a possible trend reversal, as the Zacks rank has proven to be an excellent timing indicator, helping investors to identify exactly when a company’s prospects are about to change start improving the company.

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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.

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