Ericsson (ERIC) Now Trades Above Golden Cross: Time to Buy?

After reaching an important support level, Ericsson (ERIC) could be a good stock pick from a technical perspective. ERIC recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.

There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, since bigger time periods tend to form stronger breakouts.

Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.

A golden cross contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.

ERIC could be on the verge of a breakout after moving 17.5% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.

Looking at ERIC's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 3 changes higher compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.

Investors may want to watch ERIC 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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