Home > stock charts, Stock Market, technical analysis > TSL support holds, setting up a breakout?

TSL support holds, setting up a breakout?

Trina Solar (TSL) is a Chinese ADR that I’ve bought into recently.  I opened an initial position around $27.5, then added yesterday in the low $26’s, around TSL’s 200 day moving average.  The fundamentals are fantastic, (P/E under 7, revenue and earnings growth 100%+, ROE over 33%, so forth), but Chinese ADR’s often have great fundamentals on paper.  The risk of accounting fraud has led Chinese stocks to trade at deep discounts pretty regularly for the last decade – often with good reason.  TSL has a market cap over $2B, it has decent exposure, over 60% institutional ownership, and has presumably been more vetted than some others.  Most importantly to me, the chart is pretty compelling.

TSL is forming a pretty clear ascending triangle.  In the last two days, TSL has tested and held its rising uptrend line – which coincided neatly with the 200 DMA.  That trendline provides a nearby exit should the price breakdown.  On the upside, I’d be looking for a rally to $31.  A strong move above $31 would indicate a breakout.

Here’s a look a the ascending triangle that’s formed over the last 2 years:

Here’s a closer look at today’s bounce off support at the rising trendline and the 200 DMA.

It looks $31 is where to target an early exit.  For the more patient and hopeful, a breakout above $31 may well be a good spot to add.

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