Ive discussed Wyckoff Distributions before on this page. For a simple breakdown of this pattern, I've related this post to a previous post that can be found below.
Anyway, I believe we are seeing many of the same distribution cycle elements on this solar stock. I think we are currently in phase D which is usually characterized by a false bullish breakout into a downtrend. I am concerned about the lack of a clear downtrend after creating the false break. Notice the higher lows being created by the wicks in the lower portion of the channel. Long lower wicks with relatively small/avg volume suggest that selling pressure is weak. If that is the case, big money is not yet ready to take this lower.
I will be monitoring this price action closely and looking for more false breakouts and retests of the upper channel. I plan to build short positions above $200 if the opportunity presents itself. Price targets to the downside include $95, $60, and $35.
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ENPH reported earnings last night and it ripped 🚀 I am now exploring the idea that we are in the UTAD phase of the Wyckoff distr. This phase is characterized as a false breakout. Big money will allow the stock to break the upper range and trap bulls in long positions. I will be looking for signs of a reversal and consolidation up to $300. If we start to close significantly above $300, I will consider this trade a dud.
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Quick thought that I had... If prices for oil come down, demand for renewables like Solar are likely to fall. There is news of demand for oil dropping due to chinas economic weakness as well as some news about an Iran deal that could ramp up supply. Both events could push oil prices lower. Looking at the updated chart, there is consolidation at these highs. I speculate that big money is slowly exiting their position at these levels. I am looking to start scaling into a short.
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ENPH down 12% so far. Looks like this is big money is distributing. Looking for 220 first.
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If this pattern is to continue, we need to see a retest of structure and a reversal signal.
@Decam9, 53 is target I think we reach by EOY. Once it breaks support of 115 and retraces, I'll have a better idea of multiple short term targets on the way down. But for now 115
Decam9
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@FiboTrader1, I like those targets. We arrived at similar numbers using separate methods. That gives me more confidence.
FiboTrader1
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@Decam9 after doing some further analysis, 75 appears to be a target after $115 is broken
ferraraz
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@FiboTrader1, I think with earnings coming up it's safe to say this didn't pan out.
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@ferraraz, Im inclined to believe you are right given that the downtrend has not started yet. It is still well within the distribution range so I am not calling it a quits just yet. We still have room for the "UTAD" test which is essentially a false breakout to the upside. Ill keep watching it.