Canadian Solar Inc. (NASDAQ: CSIQ)

Canadian Solar Inc. engages in the design, development, manufacture, and sale of solar power products worldwide. The company offers solar wafers, cells, and solar module products that convert sunlight into electricity for various uses. Its products include a range of standard solar modules for use in a range of residential, commercial, and industrial solar power generation systems. The company also designs and produces specialty solar modules and products consisting of customized solar modules that its customers incorporate into their products, such as building integrated photovoltaic modules, or BIPV modules; and specialty products, such as portable solar home systems and solar-powered car battery chargers. In addition, it sells solar system kits, a package consisting of solar modules produced by it; and third party supplied components, such as inverters, racking system, and other accessories.

To review potential trading opportunities with Canadian’s stock, please take a look at the 1-year chart of CSIQ (Canadian Solar, Inc.) below with my added notations:

1-year chart of CSIQ (Canadian Solar, Inc.)

Double tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T). CSIQ appears to have formed a double top price pattern (red) from the beginning of the year until earlier this week. As with any price pattern, a confirmation of the pattern is needed. CSIQ confirmed its pattern by breaking the $35 support (blue) that was created by the double top pattern.

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The Tale of the Tape: CSIQ has broken down from its double top and should be moving lower overall. A short trade could be made on any rallies back up to $35, while a long trade could be made if the stock were to break back above the $35 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach