Should You Buy EuroDry (EDRY) After Golden Cross?

From a technical perspective, EuroDry (EDRY) is looking like an interesting pick, as it just reached a key level of support. EDRY's 50-day simple moving average crossed above its 200-day simple moving average, which is known as a "golden cross" in the trading world.

A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.

There are three stages to a golden cross. First, there must be a downtrend in a stock's price that eventually bottoms out. Then, the stock's shorter moving average crosses over its longer moving average, triggering a positive trend reversal. The third stage is when a stock continues the upward momentum to higher prices.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

EDRY could be on the verge of a breakout after moving 7.8% higher over the last four weeks. Plus, the company is currently a #3 (Hold) on the Zacks Rank.

The bullish case solidifies once investors consider EDRY's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 1 revision higher in the past 60 days. The Zacks Consensus Estimate has increased too.

Investors may want to watch EDRY for more gains in the near future given the company's key technical level and positive earnings estimate revisions.

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com