Zhone Technologies Inc (ZHNE) Sees Hammer Chart Pattern: Time to Buy?
August 26, 2013
by Zacks Equity Research
Zhone Technologies Inc (ZHNE) has been struggling lately, but the selling pressure may be coming to an end soon. That is because ZHNE recently saw a Hammer Chart Pattern which can signal that the stock is nearing a bottom. Plus, earnings estimates have been rising for this company, even despite the sluggish trading lately. Estimates have actually risen so much that the stock now has a Zacks Rank #2 (Buy) suggesting this relatively unloved stock could be due for a breakout soon.
Now can someone explain to me what a Hammer Pattern is? Is it same as Cup and Handle someone had mentioned earlier?
what i do see in the chart is that in the 9 trading days after the peak close, 8 out of 9 days were down during the day. Since the 9 th of August. 8 of of 11 trading days have been up during the day. To me this indicates the net day trading activity has gone from sell to buy as the price has moved up form 2.40 to 2.80.
I just don't think one candlestick has that much meaning. I expect resistance at 3.08 and 3.40.
The hammer is not a pattern, it is a one day candlestick. The pattern that has formed is a called a flag or a wedge( take your pick). This pattern has a downward channel. Today we saw the breakout where the price clearly broke above the downward trendline on strong volume.