The Aroon Up indicator for Noble Iron Inc. (OTC:$TXDSF) has risen above 70, putting many investors on notice. The indicator, named for the Sanskrit word for ‘Dawn’s Early Light’, is an oscillating indicator that can identify stocks with strong upward building momentum.
When the Aroon-Up crosses the Aroon-Down to the upside, the indicator sends a signal of a potential uptrend. A reading of 100 indicates that the price action has hit new highs. Signal confirmation of an uptrend is received when the Aroon-Up remains between 70-100 and the Aroon-Down remains between 0-30.
Developed by Tushar Chande in 1995, the Aroon is a tool used to identifying and measure the presence and strength of trends. Whenever the components of the Aroon indicator are close together it is a sign of market consolidation, according to Chande. Each side measures one form of the trend. The Aroon-Up measures the uptrend and the Aroon-Down measures the downtrend. Ratings that drop below 50 indicate a loss of momentum for their respective trends, whereas values above 70 indicate a strong trend in the respective direction.
We can also take a look at some other indicators. The Commodity Channel Index is a technical indicator that can be used to determine if a stock is overbought or oversold, and can sometimes identify divergences and possible signal reversals. A CCI near +100 gives an overbought signal, whereas a CCI of -100 gives an oversold signal. Noble Iron currently has a 14 day CCI of 78.97.
Relative Strength Index can be used to measure whether a stock is oversold or overbought. The scale runs from 0-100. If a stock’s RSI is above 70 it may indicate a stock is overbought. If a stock’s RSI drops below 30, it may indicate the stock is oversold. The most popular time frame for the RSI is 14 days, but any time frame can be used. Noble Iron has a 3 day RSI of 63.53, a 7 day RSI of 61.72, and a 14 day RSI of 64.88.
Moving averages also are good indicators to look at. The moving average is the average price of a stock over a given time frame. These can be useful for identifying peaks and valleys, determining stock health, and spotting directional trends. If shorter-term moving averages drop above or below a longer-term moving average, it can be an indicator of either a bullish or bearish trend. Noble Iron’s 7-day moving average is currently $0.43.
Finally, we can take a look at the Average Directional Index. The ADX measures the specific strength of a trend. Ratings run from 0-100. A rating of 0-20 indicates no trend, a rating of 20-25 indicates no clear trend, and a rating of +25 indicates a strong trend, with strength increasingly parallel to ADX. This indicator is often used in conjunction with the Plus Directional Index and the Minus Directional Index. ADX currently has a 14-day ADX of 52.37, indicating a very strong trend.
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