U.S. markets close in 5 hours 30 minutes
  • S&P 500

    4,284.73
    -12.41 (-0.29%)
     
  • Dow 30

    33,976.59
    +64.15 (+0.19%)
     
  • Nasdaq

    13,007.20
    -120.85 (-0.92%)
     
  • Russell 2000

    2,008.88
    -12.47 (-0.62%)
     
  • Crude Oil

    89.64
    +0.23 (+0.26%)
     
  • Gold

    1,791.00
    -7.10 (-0.39%)
     
  • Silver

    20.12
    -0.15 (-0.73%)
     
  • EUR/USD

    1.0187
    +0.0023 (+0.22%)
     
  • 10-Yr Bond

    2.8590
    +0.0680 (+2.44%)
     
  • GBP/USD

    1.2104
    +0.0046 (+0.38%)
     
  • USD/JPY

    134.2710
    +0.9990 (+0.75%)
     
  • BTC-USD

    23,864.02
    -271.54 (-1.13%)
     
  • CMC Crypto 200

    567.66
    -4.26 (-0.74%)
     
  • FTSE 100

    7,535.61
    +26.46 (+0.35%)
     
  • Nikkei 225

    28,868.91
    -2.87 (-0.01%)
     

Brigham Minerals (MNRL) Could Find Support Soon, Here's Why You Should Buy the Stock Now

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The price trend for Brigham Minerals (MNRL) has been bearish lately and the stock has lost 7.4% over the past four weeks. However, the formation of a hammer chart pattern in its last trading session indicates that the stock could witness a trend reversal soon, as bulls might have gained significant control over the price to help it find support.

While the formation of a hammer pattern is a technical indication of nearing a bottom with potential exhaustion of selling pressure, rising optimism among Wall Street analysts about the future earnings of this mineral and royalty interests company is a solid fundamental factor that enhances the prospects of a trend reversal for the stock.

1-month candlestick chart for MNRL
1-month candlestick chart for MNRL

What is a Hammer Chart and How to Trade It?

This is one of the popular price patterns in candlestick charting. A minor difference between the opening and closing prices forms a small candle body, and a higher difference between the low of the day and the open or close forms a long lower wick (or vertical line). The length of the lower wick being at least twice the length of the real body, the candle resembles a 'hammer.'

In simple terms, during a downtrend, with bears having absolute control, a stock usually opens lower compared to the previous day's close, and again closes lower. On the day the hammer pattern is formed, maintaining the downtrend, the stock makes a new low. However, after eventually finding support at the low of the day, some amount of buying interest emerges, pushing the stock up to close the session near or slightly above its opening price.

When it occurs at the bottom of a downtrend, this pattern signals that the bears might have lost control over the price. And, the success of bulls in stopping the price from falling further indicates a potential trend reversal.

Hammer candles can occur on any timeframe -- such as one-minute, daily, weekly -- and are utilized by both short-term as well as long-term investors.

Like every technical indicator, the hammer chart pattern has its limitations. Particularly, as the strength of a hammer depends on its placement on the chart, it should always be used in conjunction with other bullish indicators.

Here's What Increases the Odds of a Turnaround for MNRL

There has been an upward trend in earnings estimate revisions for MNRL lately, which can certainly be considered a bullish indicator on the fundamental side. That's because a positive trend in earnings estimate revisions usually translates into price appreciation in the near term.

Over the last 30 days, the consensus EPS estimate for the current year has increased 9.5%. What it means is that the sell-side analysts covering MNRL are majorly in agreement that the company will report better earnings than they predicted earlier.

If this is not enough, you should note that MNRL currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises. And stocks carrying a Zacks Rank #1 or 2 usually outperform the market. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Moreover, a Zacks Rank of 1 for Brigham Minerals is a more conclusive indication of a potential trend reversal, as the Zacks Rank has proven to be an excellent timing indicator that helps investors identify precisely when a company's prospects are beginning to improve.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Brigham Minerals, Inc. (MNRL) : Free Stock Analysis Report

To read this article on Zacks.com click here.