Is it time to buy UBER?
Uber has fallen quite significantly due to COVID 19, along with many other stock across the economy however with the stock starting to recover is it time to buy? We don’t think so in fact many technical indicators point towards a decline.
The Bollinger bands are an additional indicator used in technical analysis to detect volatility if the bands are close together then there is considered to be low volatility however if the bands widen then there is considered to be high levels of volatility. Also, it is very uncommon for a stock to move outside the Bollinger bands if it does, it will more often than not shift back inside the Bollinger band. In the graphic above we can see that the Bollinger Bands have narrowed and for now that suggests that the price is more stable and less volatile, again indicating that the price is likely to remain in this price range. Also as the stock price of Uber is outside the Bollinger band it is likely that price will fall to go back into the Bollinger band.
Balance of Power
The Balance of power indicator is very simple when the line is above 0 it indicates that buyers have dominance over sellers and when it is below 0 it indicates that sellers have dominance over buyers. The indicator moves between 1 at the very highest and -1 at the very lowest the indicator tracks how strongly price trades to extreme high and low levels. The Reading Uber has is -.32 which indicates sellers are dominating the buyers in the market pointing to the conclusion that Uber shares may move lower.
The Money Flow Indicator works very similarly to the Relative Strength Indicator however it takes the Volume of a stock into account were the RSI does not. This indicator that is used to detect if a stock is oversold or overbought. The default time period is 14 periods with values bounded from 0 to 100. A reading of above 70 means the stock is overbought highlighting a bearish signal that the stock might fall in price. This is the case with Uber it is at 73 indicating that it might be overbought, as it is right at the top of the Moneyflow Indicator indicating that it is likely to fall in the future.
There is clearly a decrease in Volume highlighted by the vertical bars underneath the chart. Showing that trading activity among investors is decreasing which normally means that there is less interest among investors to buy. With a higher than average trading activity the volatility of UBER is likely to decrease as well as a likely decrease in the value of the underlying stock.