Technical Analysis (TA) involves the careful study of a stock’s chart patterns and trends. Although this skill set may seem daunting at first, even beginners can incorporate a few select TA methodologies into their investment strategy with great success. TA can be particularly useful in predicting the movements of penny stocks because of their volatility– provided there is enough trading volume to back up the patterns you are trying to find.
Below you will find a list of some penny stocks with interesting technical setups. Remember to act quickly and exit your position if the stock does not behave as expected, as this may mean that the trend or signal has changed or failed.
Some of the configurations described below may no longer be relevant or intact by the time you read this article. Please perform your own due diligence. Please note that penny stocks are notoriously volatile.
New stocks to watch
TRX Gold Corporation (TRX)
TRX Gold Corporation (TRX) graph shows that it is in a uptrend. It is currently trading sideways in a pennant consolidation training. The pennant is a small symmetrical triangle. The stock price is expected to exit the pattern in the same direction it entered. This is why he is known as a continuation pattern. Since the trend before the formation of the pattern was up and the price entered the pattern from below, it is likely that the price will break out of the upper line, continuing the previous uptrend. However, a break below the lower trendline is possible, and if that happens, the pattern fails and turns bearish.
The chart of TRX also shows the completion of the formation of a Gold Cross. This is a bullish formation that occurs when the short-term trendline crosses above the longer-term trendline. In this case, the 50 days moving average broke above the 200-day trend line. Investors should wait for the price to break out of the flag to determine which direction to place a trade.
Clovis Oncology, Inc. (CLVS)
On June 21, 2022, Clovis Oncology, Inc. (CLVS) widened on very high volume, which was bullish. The price continued to rise for about two weeks before meeting resistance. On July 11, 2022, the price began a slow retreat, dropping to find Support at the top of the previous gap made on June 21, 2022. The entire area of the gap is support. Investors should watch to see what the stock price will do in this area. If the support is able to hold and the price does not penetrate the lower support line, then it is possible for the trend to resume higher.
However, the slide below the 50-day moving average on August 8, 2022, on a small downward gap and high volume, is bearish. Also, traders should pay attention to the panel below the price on the chart below, which shows the Moving Average Convergence Divergence (MACD) oscillator. The signal line is above the MACD line, which is bearish.
Alto Ingredients Inc. (ALTO)
At the time Alto Ingredients, Inc. (ALTO) formed a hammer on June 30, 2022, a positive divergence along with the price and the MACD had also formed. A positive divergence occurs when the price hits a lower low, but the indicator does not. Both relative strength index (RSI) and the MACD showed higher lows as Alto Ingredients stock bottomed. The price continued to rise and managed to break through its 50-day moving average.
The MACD line is currently above the signal line, which is bullish. With the RSI at around 66, traders should watch the stock potentially to enter overbought territory. It is possible that there will be a short-term reaction before the uptrend resumes.
OraSure Technologies Inc. (OSUR)
The past year has been disappointing for OraSure Technologies, Inc. (OSUR) investors, whose shares fell 73% in value during this period. However, a close look at recent OraSure charts may reveal that their luck may soon change.
The shares came out of a period of consolidation. The bears appear to have lost the battle over the future direction of the stock. The breakout could very well herald the start of a short-term price recovery.