Sheela Foam among 4 stocks witnessing consolidation after strong trend, shows ADX scan
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Trend Indicator
ADX or Average Direction Index is a technical analysis tool that helps to quantify the strength in a stock's trend. ADX is computed based on a moving average of price range expansion over a given period. Here, we have identified 4 major mid and smallcap counters whose ADX has gone below 40. Note the data here is from the previous trading day (Source: StockEdge).
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Importance of ADX
Following the trend helps to minimize losses and also increases the scope of potential gains. Also, employing the scan enables traders to identify the strongest and most profitable trends to trade.
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Significance of ADX moving below 40
In case the ADX moves below 40 from above, it generally hints at likely consolidation in stocks after a strong trend.
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Sheela Foam
ADX: 38.4 | Previous ADX: 41.11| Closing price as on July 13: Rs 1118.2| Change %: -4.3%
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Shyam Metalics and Energy
ADX: 39.11 | Previous ADX: 41.14| Closing price as on July 13: Rs 348.35| Change %: -1.2%
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Supreme Petrochem
ADX: 39.76 | Previous ADX: 41.16| Closing price as on July 13: Rs 436.1| Change %: 1.8%
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V-Guard Industries
ADX: 39.51 | Previous ADX: 40.48| Closing price as on July 13: Rs 285.35| Change %: -2%