Ecolab Inc. (ECL) provides water optimization, hygiene and infection prevention products and services around the globe. A bit obscure, perhaps, so let's keep it simple and check on the charts and indicators of Ecolab to see what might be ahead for its stock.
In this daily bar chart of ECL, below, I can see that prices have been in a downward trend for much of the past year. Prices made a low in early November and trading volume has been heavier the past two months. Heavy turnover at a price low can be a sign that weak hands have sold to stronger hands. Prices are testing the 50-day moving average line from below and the 200-day moving average line is bottoming. The On-Balance-Volume (OBV) line has been moving sideways since March with a slight improvement the past two months. The Moving Average Convergence Divergence (MACD) oscillator is just slightly below the zero line.
In this weekly Japanese candlestick chart of ECL, below, I can see small lower shadows the past three months. The lower shadows are not dramatic but they do tell a story of traders rejecting the lows. The slope of the declining 40-week moving average line is starting to improve. The weekly OBV line shows stability the past two months and the 12-week price momentum study shows us higher lows, which means the pace of the decline has slowed. This is bullish divergence when compared to the price action. A bullish divergence at times can foreshadow a rally.
In this daily Point and Figure chart of ECL, below, I can see an upside price target of $158.
In this second Point and Figure chart of ECL, below, I used weekly price data. Here the software suggests a downside price target in the $104 area. A trade at $158.62 could turn the chart bullish.
Bottom line strategy: Traders could probe the long side of ECL on dips to $140. risking below $130. Add to longs above $160.
