Avangrid Looks Vulnerable to Further Weakness

 | Mar 09, 2017 | 3:15 PM EST
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Avangrid (AGR) staged a recovery rally since early December but an island reversal pattern in recent weeks could be just the start of further weakness in the weeks ahead.

In this daily bar chart of AGR, below, we can see how prices gaped higher in February and then gaped to the downside the other day. The price action between these two gaps could be considered an island (separated by price gaps as opposed to water). AGR is just a little bit above the 200-day moving average line. 

The On-Balance-Volume (OBV) line has turned down recently with the price action telling us that sellers are more aggressive. The Moving Average Convergence Divergence (MACD) has recently signaled a liquidate longs sell.

In this three-year weekly chart of AGR, below, we can see that prices are above the 40-week moving average line for now. The weekly OBV line is still bullish and the MACD oscillator has not crossed above the zero line for an outright go long signal.

Bottom line: AGR should decline to nearby minor support in the $40 to $39 area. A close below $40 should break the 50-day moving average line and could precipitate further weakness.

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