Loving eHealth’s Pullback from Upper Channel

Yesterday, we looked at a monthly chart of Global Payments, Inc., noting the stock has been on a bullish run since February 2019.

Today’s Chart of the Day is a Keltner Channel chart for eHealth Inc. (NYSE: EHTH).

eHealth, Inc. provides private health insurance exchange services to individuals, families, and small businesses in the United States and China. Its e-commerce platforms organize and present health insurance information in various formats that enable individuals, families, and small businesses to research, analyze, compare, and purchase a range of health insurance plans.

Now, the Keltner Channels serve as an overbought/oversold indicator. When the daily stock price is trading above the upper Channel, it signals that the stock is overbought.

There are always price retracements along the way, because stocks in a price uptrend do not advance in a straight line.

When a stock becomes overbought, it normally declines in price as the inevitable profit taking occurs.

Below is a daily price chart for eHealth Inc. along with the three Keltner Channels (Upper, Middle, and Lower).

EHTH Rockets Over Upper

The EHTH daily price chart shows that EHTH is in a strong price uptrend and recently became overbought many times as the stock traded above the Upper Keltner Channel (circled in red). As you can see, after trading above the Upper Channel in all scenarios, EHTH experienced a pullback.

Yet, even though EHTH experienced the pullbacks, in all cases the stock always continued to rally afterwards.

If you want to participate in this rally, where is the best place to enter?

We use the Keltner Channels to help us select a lower-risk entry point.

A Keltner Channel “Buy Zone” occurs when a stock is trading below the Upper Keltner Channel. Once the daily price is trading below the Upper Channel, it signals a buying opportunity.

If you had purchased EHTH shares when EHTH entered the “Buy Zone” around January 14th, you’d be up 41.64% on the stock by now.

Knowing that EHTH shares are continuing to rise, experience pullbacks, and rally again, we’ll be paying attention to future pullbacks in order to get in at the lowest entry point.

Maximizing Our Profit Potential

Additionally, we’d like to talk about how a previous Chart of the Day stock has done…

On January 14th, we highlighted ASML Holding NV (NYSE: ASML), noting that ASML’s monthly price was trading above the 10-Month SMA.

If you happened to have purchased ASML shares on that day, you’d already be up 5.24%.

But… if you had purchased the right option contract, you would be up 47.3% in just over a month’s time!

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Best Regards,

Chuck Hughes
Editor, Chart Of The Day

Shane Ormond

Written By Shane Ormond

Shane Ormond is the managing editor for One Last Thing. In a previous life, he wrote and edited copy for International Living in Waterford, Ireland.