The American producer and retailer of ethanol, distillers grains, and natural gas as well as a holding company in energy entities, REX American Resources Corp (NYSE: REX) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 Channel Breakdown: The daily chart shows that REX has recently broken down from an uptrend channel that was formed during the past few months. This is a bearish sign. The channel is marked in purple color lines in the daily chart. Once a stock breaks down from a channel, it typically moves lower in the near-term.
Daily Chart – REX
#2 MACD below signal line: The MACD line (blue color) has currently crossed below the MACD signal line (orange color), indicating bearishness.
#3 Bearish Stochastic: The stochastic in the daily chart is near overbought levels and moving down. The %K line has also crossed below the %D line. All these indicate possible bearishness.
#4 Bearish MACD: In the daily chart, the MACD line has currently crossed below the MACD signal line, indicating overall bearishness.
#5 Bearish ADX and DI: The ADX and DI indicate bearishness as per the daily chart. This is because (+DI) < (-DI); and ADX has started rising from below both (+DI) and (-DI).
#6 Below Support Level: The weekly chart shows that the stock has currently broken down from a long-term support level. This level is marked as an orange color dotted line. This breakdown is a possible bearish indication. Once a breakdown from a support level happens, it tends to act as a new resistance level. The stock is also trading below its 50-week as well as 200-week SMA, indicating an overall weakness.
Weekly Chart – REX
#7 Bearish RSI: The weekly chart shows that the RSI is currently moving down from oversold levels and is currently below 50, which is a possible bearish sign.
#8 Bearish Stochastic: In the weekly chart as well, the stochastic is moving down from overbought levels. The %K line has also crossed below the %D line. All these indicate possible bearishness.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take short positions on REX below the price of around $61.50.
TP: Our target prices are $58 and $50 in the next 3-6 months.
SL: To limit risk, place a stop loss at $63.50. Note that this stop loss is on a closing basis.
Our target potential downside is 6% to 19% in the next 3-6 months.
For a risk of $2.00, our target rewards are $3.50 and $11.50. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers nearly 2x to 6x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the channel with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
— Tara
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.