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FuelCell Energy, Plug Power Show Relative Strength Against Market: Here's How To Play The Trend

FuelCell Energy, Inc (NASDAQ:FCEL) and Plug Power, Inc (NASDAQ:PLUG) are both trading higher in strong uptrends. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods. Traders can use moving averages to help identify an uptrend, with rising lower timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend and rising longer-term moving averages (such as the 200-day simple moving average) indicating a long-term uptrend.

A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows typically take place at resistance and support levels.

In an uptrend the "trend is your friend" until it’s not, and in an uptrend there are ways for both bullish and bearish traders to participate in the stock:

  • Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in a stock trading in an uptrend can usually find the safest entry on the higher low.

  • Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low indicating a reversal into a downtrend may be in the cards.

The FuelCell Chart: Despite overall market weakness, FuelCell has held onto the uptrend it has been trading in since reaching a bottom at the $3.40 level on Jan. 28.

  • FuelCell’s most recent higher low was printed on Feb. 14 at the $4.52 level and on Friday, FuelCell wicked from the $4.90 area and held support at the eight-day exponential moving average, which may indicate the next higher low has been printed.

  • Bullish traders will want to see FuelCell rise up above the $5.60 level to reach another higher high within the coming days.

  • FuelCell has resistance above at $5.77 and $7.17 and support below at $4.52 and $3.36.

The Plug Power Chart: Like FuelCell, Plug Power has been trading in an uptrend since Jan. 28 when the stock hit a bottom at the $17.51 level.

  • Plug Power’s most recent higher low was created on Feb. 14 at just below the $21 level, and the most recent higher high was printed on Feb. 16 at $24.40.

  • The stock may have formed another higher low on Friday, but Tuesday’s candlestick will be needed for confirmation.

  • Plug Power has resistance above at $24.40 and $26.87 and support below at $20.99 and $18.47.

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