Shares of solar energy firm First Solar, Inc. (NASDAQ:FSLR) rallied nearly 10% on Thursday and by so doing accomplished an important technical breakout. Barring any immediate bearish reversal and outside news FSLR stock now looks poised to push well higher again as the next up-leg is underway.
So you know, I have offered profitable trading ideas on FSLR stock in this column several times over the past eight months as the stock began building a sound base and pushed well higher since May of 2017.
The Thursday rally in FSLR stock as well as in other U.S. solar-related stocks came on the back of renewed hopes that the Donald Trump administration on Jan. 26 may chose to impose tariffs on imported solar modules and solar cells.
More specifically for First Solar, its stock saw positive comments from analysts. All of this together really got the animal spirits going for one beauty of a breakout rally.
FSLR Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Looking at the multiyear weekly chart, we see that the Jan. 11 rally finally pushed FSLR stock above a simple horizontal line around the low $70s, that has been a source of technical resistance since 2014.
Although the stock has traveled far and in a steep slope since May of 2017, it has along the way also routinely had healthy consolidation phases. The latest consolidation phase began on Dec. 11, allowing the stock to rest … until the powerful breakout came to fruition on Jan. 11.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart we see the sequence of consolidation periods since last May a little better. This type of pattern, i.e. rally followed by sideways consolidation, followed by another rally, is healthy to say the least. The difference between the previous rallies from 2017 and the one that just took place on Jan. 11 however is that this new one also broke FSLR stock above the aforementioned multi-year line of resistance.
Theoretically this latest breakout should see more traders and investors jump aboard and be able to push the stock higher toward the low to mid $80s as a next upside target.
Additionally, if the Trump administration were to impose tariffs on foreign-made solar cells, this could get more analysts to release upgrades on the stock and really get the animal spirits going.
Check out Anthony Mirhaydari’s Daily Market Outlook for Jan. 12.
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