Despite the release of its third quarter income statement on November 11, Array Technologies’ shares soared more than 20% on the trading day after the company announced its acquisition of STI Norland. The Canadian semiconductor company also boosted the overall bullish semiconductor sector, with stocks such as Advanced Micro Devices Inc. surging 30% in November.
Matrix technology diagram
After rallying to its November 15 high of $ 27.67, Array Technologies began a period of consolidation. As part of the consolidation, the stock turned into both a bullish flag and a triple inside bar pattern.
The bullish flag pattern was created between November 10 and Wednesday, the pole formed between that date and November 12, and the flag was formed between November 15 and Tuesday. The measured movement in the case of recognizing a bull flag, calculated by adding the length of the pole as a percentage to the bottom of the flag, is around 39 percent, indicating that the Array could rise to the $ 36 mark at some point in the future.
The pattern flag is also a triple inside bar, with a parent bar formed on November 15th and inside bars formed on Monday and Tuesday. The pattern is considered bullish because the stock was trading higher prior to the formation of inside bars. Traders can watch for a breakout of the pattern on high volume to confirm that the pattern has been recognized.
The Array’s Relative Strength Index reaches around 70 percent, which may indicate the need for further consolidation before moving up. When the RSI of a stock reaches or exceeds the 70 percent level, it becomes overbought, which can be a sell signal for technical traders. However, it should be noted that the RSI can remain extended for long periods of time.
The Array is trading above the eight-day and 21-day exponential moving averages (EMA), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above its 50-day simple moving average, which indicates bullish sentiment in the long term.
Bulls want to see breakouts from both the bullish flag and inside bar patterns on high volume. The stock has resistance higher at $ 27.67, $ 28.62 and $ 30.56.
The bears want a lot of bearish volume to come in and bring down the Array below the eight-day EMA, which will nullify the bullish flag. The stock is supported down by $ 26.33 and $ 23.14.
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