Enphase Energy ( ENPH) designs and produces software-driven home energy technology that spans solar generation, home energy storage and web-based monitoring and control. We were bullish on ENPH back on Nov. 22, but a key reversal day soon started a steep correction lower. Let's check on the charts again.
In this daily bar chart of ENPH, below, we can see that prices have returned to our purchase zone around $180. Prices are trading below the rising 50-day moving average line and just above the rising 200-day line. Trading volume does not show an increase on the recent decline, but we can see some softness in the On-Balance-Volume (OBV) line in December. The Moving Average Convergence Divergence (MACD) oscillator is bearish and has not yet begun to narrow.
In this weekly Japanese candlestick chart of ENPH, below, we can see the most recent candlestick pattern is a doji right on the 40-week moving average line. It is early in the week and we need to see some confirmation, but a doji could mark the end of the decline. The weekly OBV line shows only a very slight decline and the MACD oscillator has just crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of ENPH, below, we can see that prices reached and exceeded a downside price target of $205. This does not mean that ENPH is a buy, though we can see that potential chart support is not far away.
Bottom line strategy: The quickest-turning reversal pattern I ever learned about was on a trading desk for Treasury bonds in the mid-1980s. The pattern was called a close above the high of the low day. If Monday was the low day for ENPH, then a close above $185.6297 (Monday's high) will be a short-term buy signal. Risk a new low if you decide to try this technique.
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