NRG Energy (NRG) has had its ups and downs over the past 10 years, but the chart shows that based on historical prices, the $15 area has proved, so far, to be a good buying zone. Will it work again?
History shows us in the chart above that in 2005, 2008, 2009 and again in 2012, when NRG declines to the $15 area, it has been a buying opportunity. That is history, meaning that is how investors have reacted in the past.
NRG has been trending lower on the chart above, reaching the $18 area. The trend is still down, and I have yet to see a classic reversal pattern. Momentum (the lower panel) is not yet showing us a bullish divergence, which occurs when prices make a lower low but the momentum indicator makes a higher low. A higher low on the momentum indicator tells us the rate of decline has slowed. Typically, the rate of decline in prices slows before prices turn higher.
Because we have yet to see a bullish divergence on NRG at $18, we might still see a further decline to the $15 area. At $15, we will get to see if history repeats itself.
Meanwhile, keep your powder dry a little bit longer.