Enphase Energy Arrives at a Crossroads

Discipline is key to successful trading.

Enphase Energy ENPH is an energy technology company that develops and manufactures solar micro-inverters, battery energy storage, and electric vehicle (EV) charging stations primarily for residential customers. 

We recommended ENPH back on July 28 here and again on September 15 in our piece "Our Enphase Energy Forecast: More Sunny Days Ahead for This Solar Stock" writing that, "Traders who are long ENPH should continue to hold those positions but raise stops to $268. The round number of $400 is our next price target."

Traders should be stopped out of longs but let's check on things again. 

In the daily Japanese candlestick chart of ENPH, below, we see a weak picture. The shares have made a new low for the pullback and have broken some support in the $270 area. So far this Thursday the price action is not lending itself to a bottom reversal pattern like a harami. We'll see how things look at the close of trading. The slope of the 50-day moving average line is cresting.

The On-Balance-Volume (OBV) line has weakened since early September and tells us of a shift from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has just moved below the zero line for an outright sell signal. 

 

 

In the weekly Japanese candlestick of ENPH, below, we can see that traders rejected the lows below $260 with a lower shadow on the latest candle. Prices are above the rising 40-week moving average line but this is a lagging indicator.

 

The weekly OBV line shows some weakness in September. The MACD oscillator is close to a downside cross and potential take profit sell signal. 

 

 

 

In this daily Point and Figure chart of ENPH, below, we can see that the X's and O's are projecting a downside price target in the $205 area. 

 

 

 

In this weekly Point and Figure chart of ENPH, below, we can see a longer-term price target in the $389 area -- a big difference from the daily chart (above). 

 

 

 

Bottom-line strategy: Discipline is key to successful trading. Traders who are long ENPH should be stopped out. ENPH may go much higher in the future but it is the here and now we need to deal with. Stand aside and wait for another relatively low risk buying opportunity.

 

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