Technical analysis (TA) involves the careful study of a stock’s chart patterns and trends. Although this set of skills may seem daunting at first, even beginners can incorporate a few select TA methodologies into their investing strategy to great success. TA can be especially helpful when predicting the movements of penny stocks because of their volatility—provided there is enough trading volume to back up the patterns you’re trying to find.
Below, you’ll find a list of some penny stocks with interesting technical setups. Remember to move quickly and exit your position if the stock isn’t behaving how you expect it to, because this may mean that the trend or signal has changed or failed.
Some of the setups described below may no longer be relevant or intact as of when you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds newsletter. Leeds may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.
New Stocks to Watch
TRX Gold Corporation (TRX)
As of the time this article was being written, TRX Gold Corporation’s (TRX) charts featured an inverted hammer candlestick. This can be a fairly reliable indication that a stock will assume a bullish trajectory from this point forward, at least over the short term. However, because trading volume is at only around 65,000 at the time of this writing (most likely because of the long weekend holiday at the beginning of the month), readers should watch TRX closely for confirmation—that is, in the form of higher prices over the next few trading days.
Clovis Oncology, Inc. (CLVS)
From a technical analysis standpoint, Clovis Oncology, Inc. (CLVS) is looking exceptionally well positioned for significant gains over the short term. A close to perfect white/bullish marubozu candlestick, underpinned by huge volume, typically strongly suggests much higher prices ahead. Another positive technical sign was seen around the middle of June 2022, when the stock gapped up significantly. That said, a relative strength index (RSI) of 78 could suggest that the stock is becoming overbought and could be due for a bearish trend reversal. Investors may therefore want to take an extremely short-term trading view on this one or watch carefully for sudden downturns.
Alto Ingredients, Inc. (ALTO)
Despite a brutal loss of 48% over the past quarter, Alto Ingredients, Inc. (ALTO) actually has some pretty great fundamentals, including some very promising financial ratios (like a forward P/E ratio of 5.89x). Technical analysis reveals that this potentially underrated stock could be on the verge of a return to its previous $7-per-share highs, however. The RSI of 29.73, for example, is highly bullish for the stock and may indicate that a trend reversal is in the works. A hammer candlestick may also have been in the making as of the first day of July, so watch the charts closely here.
OraSure Technologies, Inc. (OSUR)
The past year has been a disappointing one for OraSure Technologies, Inc. (OSUR) investors, whose shares have dropped a whopping 73% in value over that period. A close look at OraSure’s recent charts, however, may reveal that their luck could be changing soon.
Consider, for instance, the RSI of 23.65, which suggests that OraSure stock is oversold. In addition, shares have entered a period of consolidation, trading sideways around the same price level as bears and bulls battle over the future of the stock. The high number of doji candlesticks, which represent investor uncertainty, during this time could very well herald the start of a price recovery over the shorter term.
Image and article originally from www.investopedia.com. Read the original article here.