Stock Notebook: Chartists Watching Shares of Mandalay Resources Corp (MND.TO)

Chartists are paying particular close attention to shares of Mandalay Resources Corp (MND.TO) as the equity has touched the near-term bottom Bollinger Band, touching 0.325 on a recent trade.  Using this along with several other technical indicators can help investors understand if the shares will continue the downward momentum or bounce back up from the band. 

Bollinger Bands are a technical analysis tool, specifically they are a type of trading band or envelope. Trading bands and envelopes serve the same purpose, they provide relative definitions of high and low that can be used to create rigorous trading approaches, in pattern recognition, and for much more. Bands are usually thought of as employing a measure of central tendency as a base such as a moving average, whereas envelopes encompass the price structure without a clearly defined central focus, perhaps by reference to highs and lows, or via cyclic analysis. We’ll use the term trading bands to refer to any set of curves that market technicians use to define high or low on a relative basis.

As a market becomes volatile, its Bollinger bands will expand (referred to as expansion); as it flattens out they will contract (contraction). In this way, they enable traders to see beyond short-term volatility and gain insight into longer price movements.

The use of Bollinger bands can also indicate whether a market is heading into overbought or oversold territory. When a market’s price continually moves outside the upper parameters of a Bollinger band, it can be considered to be overbought, and when it moves below the lower band it could be considered oversold.

Technical traders often make a point of keeping an eye on the ATR or Average True Range as well as other key charts. Currently, Mandalay Resources Corp (MND.TO) has a 14-day ATR of 0.02. The Average True Range is an investor tool used to measure stock volatility. The ATR is not used to figure out price direction, just to measure volatility. The ATR is an indicator developed by J. Welles Wilder. Wilder has developed multiple indicators that are still quite popular in today’s investing landscape. The general interpretation of the ATR is the higher the ATR value, the higher the volatility.

The Williams Percent Range or Williams %R is another technical indicator worth checking out. Mandalay Resources Corp (MND.TO) currently has a 14 day Williams %R of -57.14. The Williams %R fluctuates between 0 and -100 measuring whether a security is overbought or oversold. The Williams %R is similar to the Stochastic Oscillator except it is plotted upside-down. Levels above -20 may indicate the stock may be considered is overbought. If the indicator travels under -80, this may signal that the stock is oversold. Chart analysts may also use the indicator to project possible price reversals and to define trends.

The Average Directional Index or ADX is technical analysis indicator used to discern if a market is trending or not trending. The ADX alone measures trend strength but not direction. Using the ADX with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) may help determine the direction of the trend as well as the overall momentum. Many traders will use the ADX alongside other indicators in order to help spot proper trading entry/exit points. Currently, the 14-day ADX for Mandalay Resources Corp (MND.TO) is 28.06. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would signal a very strong trend, and a value of 75-100 would indicate an extremely strong trend.

Traders may be leaning on technical stock analysis to help with investing decisions. Mandalay Resources Corp (MND.TO) currently has a 14-day Commodity Channel Index (CCI) of -96.30. Despite the name, CCI can be used on other investment tools such as stocks. The CCI was designed to typically stay within the reading of -100 to +100. Traders may use the indicator to determine stock trends or to identify overbought/oversold conditions. A CCI reading above +100 would imply that the stock is overbought and possibly ready for a correction. On the other hand, a reading of -100 would imply that the stock is oversold and possibly set for a rally.

Traders are paying renewed attention to shares of Mandalay Resources Corp (MND.TO). The current 14-day RSI is presently sitting at 42.08, the 7-day is 40.13, and the 3-day is 30.55. The RSI, or Relative Strength Index is a popular oscillating indicator among traders and investors. The RSI operates in a range-bound area with values between 0 and 100. When the RSI line moves up, the stock may be experiencing strength. The opposite is the case when the RSI line is heading lower. Different time periods may be used when using the RSI indicator. The RSI may be more volatile using a shorter period of time. Many traders keep an eye on the 30 and 70 marks on the RSI scale. A move above 70 is widely considered to show the stock as overbought, and a move below 30 would indicate that the stock may be oversold. Traders may use these levels to help identify stock price reversals.