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Tue. 30 Nov 2021, 10:52am ETBenzinga
In: News, Technicals, Top Stories, Trading Ideas

FuelCell Energy, Inc (NASDAQ:FCEL) has so far not received any meaningful boost from the $1.2 trillion infrastructure bill signed by President Joe Biden on Nov. 15, which allots about $9.5 billion toward the hydrogen energy industry and fuel cell technology.

The stock is trading about 70% down from the Feb. 10 all-time high of $29.44, despite a global effort to move toward clean energy and a blow-out third-quarter earnings report where FuelCell beat estimates by a whopping 20%.

FuelCell may be in for a massive run, however, if the months-long bullish pattern on its chart plays out, which could also help to power a rally in related stocks such as Plug Power, Inc (NASDAQ:PLUG) and Ballard Power Systems, Inc (NASDAQ:BLDP).

The FuelCell Chart: On June 8, FuelCell reached a high of $12.62 and printed a long-legged doji candlestick, which indicates the stock was likely to fall. FuelCell then entered into a long downtrend, making consistent lower highs and lower lows until the stock found a bottom on Sept. 13 at the $5.34 mark.

After reaching the bottom, FuelCell printed a doji candlestick indicating a reversal in trend and began to trade upwards, making consistent higher highs and higher lows. The downtrend, paired with the uptrend has formed a long-term cup-and-handle pattern on the daily chart with the cup formed between June 8 and Nov. 12 and the handle created as a falling channel between Nov. 15 and Monday.

On Tuesday, FuelCell was attempting to break up bullishly from the falling channel. If the pattern is recognized the measured move is about 116%, which indicates FuelCell could trade up toward the $25 level at some point in the future. The stock will first need to push up over the $11.72 level for confirmation of the pattern, however.

Within the falling channel, FuelCell printed tweezer candlesticks, in a double bottom pattern at the $8.59 level on Friday and Monday. The pattern indicates a bottom may be in although Tuesday’s candle will need to print for confirmation.

There is a gap below on FuelCell’s chart that was left behind on Nov. 1 between $8.06 and $8.25. Gaps on charts fill about 90% of the time so it is likely FuelCell will trade down into the range in the future, although it could be some time before that happens.

FuelCell is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day and 21-day EMAs trading in line, which leans bearish. The stock is trading above the 50-day simple moving average, however, which indicates longer-term sentiment is bullish.

  • Bulls want to see increasing bullish volume come into FuelCell to close the trading session above the top descending line of the falling channel. The stock has resistance above at $9.43 and $10.58.
  • Bears want to see big bearish volume come in and drop FuelCell back into the descending channel and for the stock to continue to reject the top of the pattern as resistance until it loses support at $8.31, which would put the stock into gap-fill territory. Below the level there is further support at $7.17.