Before Ecolab Moves Higher Expect a Correction
Let's review the charts and indicators.
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Ecolab ECL offers "water, hygiene and infection prevention solutions and services that protect people and the resources vital to life". The company is new to me so let's get acquainted with the charts and indicators.
In this daily bar chart of ECL, below, I can see that prices made a low in October and then a quick reversal to the upside. Prices made a small upside gap in November and a bigger upside price void in February. Prices trade above the rising 50-day moving average line and above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line shows strength from early November but it has not risen as much as prices have gone up. A bit of a disappointment. The trading volume looks like it has been more active the past four months. The Moving Average Convergence Divergence (MACD) oscillator weakened in March but remains above the zero line.
In this weekly Japanese candlestick chart of ECL, below, I see a mixed picture. Prices have rallied from a nadir in late 2022. Prices now trade above the rising 40-week moving average line but the line was broken for about three months last year.
The weekly OBV line shows a positive trend but the weekly volume histogram does not show us a pattern of expanding turnover.
The MACD oscillator is above the zero line but narrowed in March. A narrowing MACD oscillator means that the strength of the uptrend is weakening. Last week's red candle could be the start of a correction or pause in the uptrend.
In this daily Point and Figure chart of ECL, below, I can see a potential upside price target in the $289 area. Keep in mind that Point and Figure charts ignore time and volume.
In this weekly Point and Figure chart of ECL, below, I can see the same $289 price target.
Bottom line strategy: The two Point and Figure charts above suggest that ECL has further to go on the upside but in the intermediate-term we are likely to have a correction/pullback. Let's see how long and how deep this correction lasts before making purchases.
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