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Technical Analysis Of IQ Group

After suffering from a massive decline in share price, will IQ Group still be able to go back up? There is still no end to the downtrend at the moment.

As the famous Wall Street saying goes "The trend is your friend, till it ends".

The uptrend in IQ Group ended last year when it reported a decrease in earnings.

technical analysis of iq group

The chart above is the daily chart of IQ Group.

IQ Group has been rising in a nice uptrend up until August 2017. There were many warning signs of a top in this stock. First of all, the stock broke a long term uptrend line. Secondly it broke below the 50 MA which is widely followed by most investors. 

The Significance Of Breaking An Uptrend Line

IQ Group also had a bearish gap below a consolidation. Bearish gaps can often signal the end of a trend and the beginning of a new downtrend.

On the day that IQ gap down, there was extremely heavy volume. Warning signs were flashing all around to tell investors to dump the stock. From a fundamental point of view, the company's earnings fell a lot. Furthermore they did not offer concrete guidance to the future of IQ.

How Gap Down On Unusual Volume Can Make A Stock Lose Half Its Value

When you have so many technical red flags and fundamental red flags, it was a sign that the stock's bull run is over. Over the course of the next few months, investors started to dump the stock and it has been in a downtrend ever since.

So is the selling over and is it time to bottom fish?

Perhaps not.

One of the ways you can determine whether the stock is buyable is to see it go above its 50 day moving average. So far the 50 MA is still declining and the stock is staying below this important MA.

The chart above is the weekly chart of IQ Group.

There was a technical sign even in the weekly chart that warned investors of the fall. IQ dropped below the rising weekly 20 MA and this is a red flag. A healthy stock rarely falls below its weekly rising 20 MA.

There is support around 1.20 to 1.50 area.

This is perhaps where investors will want to bottom fish. But do remember, as long as the daily trend is down, it will be dangerous to buy this stock.

If you really want to bottom fish a stock, here are some articles for you:

Remember the Wall Street saying.

"The trend is your friend". Until the daily downtrend ends, try not to bottom fish this stock.

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