The company that manufactures solar PV modules and runs large-scale solar projects, Canadian Solar Inc. (NASDAQ: CSIQ) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in purple color. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – CSIQ
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#3 Price above MAs, Marubozu Candle: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. The latest candlestick is a white marubozu candle with a long white body, formed when the open equals the low and the close equals the high. The white marubozu candle indicates that buyers controlled the price of the stock from the opening bell to the close of the day, and is considered very bullish. All these indicate a possible bullish bias for the stock.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and the ADX line has started to move up from below (-DI) and (+DI) lines.
#5 Bullish Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the daily chart. This is a possible bullish sign.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.20% Fibonacci support level of the upmove before moving higher, as seen in the weekly chart. The stock is also currently trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – CSIQ
#7 Bullish RSI: The RSI is currently above 50 and moving higher in the weekly chart. This is a possible bullish sign.
#8 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well because (+DI) is greater than (-DI), and ADX has started its upmove from below (-DI) and (+DI) lines.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of CSIQ above yesterday’s close, at a price of around $45.60.
TP: Our target prices are $52 and $60 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $41.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 14% to 32% in the next 4-6 months.
For a risk of $4.10, our first target reward is $6.40 and the second target reward is $14.40. This is a nearly 1:2 and 1:4 risk-reward trade.
Overall, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
— Tara
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