The commodities in the energy sector have experienced extreme levels of volatility in recent months. While many prices are near historic lows, which has dominated the headlines, the alternative energy sector has been quietly moving higher. In this article, we will take a look at some of the graphics from the inside of the solar energy sector and trying to determine how active traders will be positioning themselves over the weeks and months to come.
Invesco Solar ETF (TAN)
The traders who are interested in adding exposure to the solar energy stocks often turn to the Invesco Solar ETF (TAN) for investment ideas and details on the calendar. Taking a look at the weekly chart below, you can see that the sector has been moving up since notching a low at the end of 2016.
The two levels that will probably be the most interesting to the trader is the horizontal trend line near $27.50 and the 200 week moving average at $23.44. Trend traders will be more likely to seek to place orders as close to support of these lines as possible and to protect their positions by placing stop in the vicinity. Based on this model, we expect this uptrend, traders will continue to dominate the dynamics over the long term.
SolarEdge Technologies, Inc. (SEDG)
Given that it is the top of the outfit of the TAN of the ETF, many traders will likely seek to analyze the graph of SolarEdge Technologies, Inc. (SEDG), that you can see below. The merchants will be more likely to note the bounce off the long term support near $70 and the way in which the price is currently trading near the 2019 summits.
The strong trend suggests that the bulls are in control of the amount of movement. If the price is able to break above $143.73 in the course of the next few weeks, then there will be no other resistance levels standing in the way of a movement on the rise.
Enphase Energy, Inc. (ENPH)
Another top holding of the TAN ETF that is worth a closer look, is Enphase Energy, Inc. (ENPH). Trend traders will probably want to keep their eyes on a long-term channel pattern on the weekly chart.
As you can see below, the ascending trendline has acted as a strong reference point for the traders who are looking to determine where to buy and sell. The purchase orders are placed as close to the lower trend line and the 50-week moving average as possible. Sell orders are placed when the price approaches the top of the curve, which is based on the logarithmic scale used on this chart, is significantly higher compared to current levels.
The Bottom Line
Many energy-related commodities are trading near historically low levels, while, on the other hand, the price of the alternative energy landscape have been quietly moving higher. Based on the models discussed above, it seems that we could be in the early stages of a long-term upward trend, and significant levels of support and resistance on weekly charts will probably be used by followers of the technical analysis in the mounting of their positions.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.