FuelCell Energy, Inc. (NASDAQ: FCEL) shows signs of an upcoming price surge according to its latest charts. FuelCell Energy, Inc., together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed baseload power generation.
Bullish Indications
#1 Consolidation Area Breakout: The daily chart shows that the stock was trading within a consolidation area for the past several months. This is marked in the daily chart in a pink color rectangle. Currently, the stock has broken out of this consolidation area with a high volume. Once a stock breaks out from a consolidation area, it usually moves higher.
FCEL – Daily Chart
#2 Above MA: The stock is currently trading above its short-term moving average of 50-day SMA, indicating that the bulls are slowly gaining an upper hand.
#3 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#4 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than (-DI), and ADX has started to move up from below (-DI) and (+DI) lines.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of its short-term downtrend and started a new uptrend. The downtrend line is marked in purple color. This seems like a possible bullish indication.
FCEL – Weekly Chart
#7 Bullish RSI: The weekly chart shows that the RSI is currently above 50 and moving higher, indicating the strength of the current upmove.
#8 Bullish MACD: In the weekly chart as well, the MACD line is currently above the MACD signal line. This is a possible bullish indication.
#9 Bullish ADX and DI: The weekly chart shows that the +DI line is above the -DI line, and the ADX line is starting to move higher from below the +DI and -DI lines. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of FCEL if it trades above the price of around $8.90.
TP: Our target prices are $11 and $13 in the next 2-6 months.
SL: To limit risk, place a stop loss below $7.60. Note that this stop loss is on a closing basis.
Our target potential upside is almost 24% to 46% in the next 2-6 months.
For a risk of $1.30, our target rewards are $2.10 and $4.10. This is almost 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the consolidation area. 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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