Everyone knows that old saying that water takes the path of least resistance and for American Water Works (AWK) the most likely path of prices is probably lower.
In this daily bar chart of AWK, below, we can see that prices are already well of their peak but further price weakness looks likely. AWK has broken the rising 200-day simple moving average line and has been below the declining 50-day average for about two months.
The On-Balance-Volume (OBV) line has been pointed down since early July telling us that sellers have been more aggressive since the peak. The Moving Average Convergence Divergence (MACD) oscillator just signaled a new go short signal below the zero line.
AWK in this weekly chart, below, has broken below the rising 40-week average line. The weekly OBV line has been declining the past three months and the MACD oscillator had a liquidate longs sell signal at the end of July. Further declines to $65 or even $60 look likely before the losses dry up.
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American States Water could trade sideways for a few weeks but the longer term trend remains up.
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