I'm starting to stalk First Solar (FSLR) on the buy side for a few reasons. Let's start with the weekly chart of this stock. I'm seeing two standout support zones on this time frame. They are both what I like to call Fibonacci price clusters.
A price cluster is the coincidence of at least three key Fibonacci price relationships that come together within a relatively tight range. This cluster zone identifies either a key price support or resistance decision in the market. In this case, we are looking at support. The first zone comes in at the $37.35-$39.48. The second zone comes in at $35.24-$36.13.
We are currently testing and holding above the first support decision. This zone is being tested into a grouping of Fibonacci time cycles that are due the weeks ending Jan. 23 and Jan. 30. So time and price are telling us to watch for a possible low and rally to start to unfold. Let's look at the daily chart next.
On the daily chart you will see very similar support from the larger swings and also some other price relationships only visible on the daily chart. See the chart for those zones. Besides that, you can see some DAILY Fibonacci time cycles that came due between Jan. 20-Jan. 22. The recent low has been made on Jan. 20.
This is definitely a counter-trend trade and there is plenty of resistance illustrated on the chart below that will need to be cleared if this is going to play out. Those levels that need to be cleared are illustrated here:
Bottom line, I am willing to start nibbling on the buy side in this one, as long as one of the key support clusters are not violated. My risk is defined below that support. Even though counter-trend trades are slightly lower probability trades, if one does start to play out, the risk/reward ratio is rather favorable. I'm actually considering writing a second book on counter-trend time/price setups in the future.
Let's see if FSLR starts to play out for the bulls or not. Even if we only see a corrective rally, I would expect at least 10-15 bucks as a minimum target.