FCEL Stock: A Symmetrical Triangle Is Approaching Completion
Well, I must say, this market might be unnerving for some, but at least it is consistent. This market continues to be characterized by wild swings, which means volatility remains elevated.
Volatility remains high because the investment community is trying to come to grips with a number of market-moving factors, from the notion that interest rates are on the rise to the belief that there is a trade war on the horizon.
These factors are not conducive to a market environment that is likely to appreciate and, therefore, the path of least resistance has been geared toward lower stock prices.
The good news I have to share is that volatility will eventually subside (because it always does) and, when it does, a higher index will likely prevail. This notion of a bull market is why I continue to spend much of my time searching for investments that are setting up to appreciate.
So it shouldn’t come as a surprise that I am focusing on FuelCell Energy Inc (NASDAQ:FCEL) stock. I believe that FuelCell Energy stock is setting up to make a move toward higher FCEL stock prices. These beliefs are centered on a technical price pattern that is approaching completion.
This technical price pattern is highlighted on the following FuelCell Energy stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on this FCEL stock chart is a symmetrical triangle pattern.
Symmetrical triangle price patterns are characterized by a series of lower highs and higher lows. These patterns are easily captured using two converging trend lines that are created by connecting the lower highs and higher lows.
Symmetrical triangles are among my favorite technical price patterns because they are very powerful and they produce excellent trading results.
The power generated from a triangle pattern is a result of energy being stored in the pattern as it develops, while investors position themselves on either side of support and resistance in anticipation of a possible breakout.
FuelCell Energy stock is currently testing resistance outlined by this pattern, and I believe that the triangle pattern will resolve itself in a bullish manner by breaking above this level of price resistance.
My belief that higher FCEL stock prices are likely in development is based on a number of technical indications that are highlighted on the following FuelCell Energy stock chart.
Chart courtesy of StockCharts.com
This FuelCell Energy stock chart illustrates that a bullish move toward higher prices preceded the development of the symmetrical triangle pattern. This suggests that the larger trend has been both bullish and constructive.
Constructive price action consists of a wave structure made up of impulse waves and consolidation waves, which are responsible for creating and sustaining a trend.
The impulse wave, highlighted in green, captures the stage in a bullish trend when a stock makes a sustained move toward higher prices. The consolidation wave, highlighted in purple, captures the stage in a bullish trend when a stock corrects.
Corrective price action is necessary for every bullish trend because it creates the conditions so that, once the consolidation wave is complete, a new advancing impulse wave can follow.
The symmetrical triangle currently in development doubles as a consolidation wave. When it is complete, it suggests that an impulse wave will follow.
I believe that this consolidation wave will resolve itself in a bullish manner. That outcome is being reinforced by the percentage price oscillator (PPO) indicator, which is highlighted in the lower panel of the above FCEL stock chart.
PPO is a momentum indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is influencing a stock’s price action. Momentum is a very powerful force, and an asset cannot make a sustained move in either direction unless the applicable momentum is supporting it.
As a testament to this, the impulse waves that began in April 2017 coincided with a bullish PPO signal, and higher FuelCell Energy stock prices prevailed. In December 2017, a bearish PPO signal was generated, a consolidation wave followed, and FCEL stock refrained from advancing.
A bullish PPO signal was just generated, which suggests that FuelCell Energy stock is geared toward higher prices. It supports the idea that the symmetrical triangle currently in development will resolve itself in a bullish manner, and that higher FCEL stock prices will follow.
I am bullish on the prospects of FuelCell Energy stock because there are a number of technical indications currently in development that are supporting such a view. I will maintain a bullish view on FCEL stock until there are indications suggesting that this view is no longer warranted.