I am a big fan of solar energy and as an investor watch it closely. For the most part it has not been a great long term investment (but can be a good trading vehicle) as it is a commodity business and as such tends to put limits on upside potential. First Solar (FSLR), one of the leading solar manufacturers has had an impressive run rising more than 500% from its 2012 bottom, peaking in March of 2014 near $74. Since then it has been consolidating sideways in a $35 channel and has retested the $74 resistance 5 times and been rejected each time.
My take on the chart is that it is presenting a very attractive setup here as
1. Price is above a rising 200 day moving average.
2. RSI momentum is in the bullish range and is rising with plenty of more room on the upside if it wants to run.
3. While not a reversal, it has formed a bullish W pattern
A technician’s adage is the wider the base the higher in space which is relevant to FSLR here. Put simply it means the longer a stock consolidates the bigger the move once it breaks out of that consolidation. With more than 2 ½ years of sideways chop this stock is setting up for a big move. Of course, they never make it easy as the market never tells you which way the move will be (up or down). But as of now the signs point to it being higher.
While the setup is in my opinion excellent and the upside it may have is very attractive, it has not yet provided a buy trigger. For me that would come on a confirmed (which includes many things, not the least of which is on significant volume) breakout above horizontal resistance so don’t mistake my bullishness as a recommendation to load up here.
I can’t end this post without the reminder that all opportunities have the chance to fail and it is imperative a plan based upon your risk tolerance and time frames on how you will manage the position should that occur be in place BEFORE you enter.