With advances in clean energy and the popularity of companies such as Tesla, Inc. (TSLA), investors around the globe are looking for ways to invest. Given the rise in popularity of niche exchange-traded funds in recent years many active traders are turning to one in particular as a way to gain exposure. In the article below we’ll take a look at the chart of the Guggenheim Solar ETF (TAN) and try to determine if now is the time to buy. (For more, see: Top 3 Solar Stocks for 2017).

Guggenheim Solar ETF

There is little question that alternative energy solutions are gaining traction and as mentioned, many investors are turning to products such as Guggenheim Solar ETF for exposure. Before jumping into a position, it is worth noting that the price of the fund is currently trading near a significant level of resistance. As you can see below, the 200-day moving average and the identified descending trendline have prevented the bulls from sending the price higher in the past and active traders would expect this behavior to continue. Bullish traders may want to take note of this chart and remain on the sidelines until the price is able to close above the resistance for several consecutive trading sessions. A confirmed breakout above the $18.28 level will likely trigger a reversal, but until then the trend is in the control of the bears. (For more, see: Are Solar Stocks Due for a Rebound?)

First Solar Inc.

Investors who are interested in more targeted exposure to companies in the solar sector may choose to analyze the top holdings of the TAN ETF. First Solar, Inc. (FSLR) is the fund’s top holding and the recent price action, as shown on the chart, suggests that this is a company worth keeping an eye on. Like the case of the TAN ETF above, the bulls have been able to push the price toward the major resistance of the 200-day moving average. However, as you’ll notice in the case of FSLR, the price has been able to close above on above-average volume. The break above the 200-day moving average is a technical signal that suggests the trend is in the process of reversing. The final technical level of resistance that needs to be overcome before a true reversal is confirmed is the descending trendline shown on the chart. Those who aren’t convinced that the trend is reversing may be wise to remain on the sidelines until the price is able to close above the February high of $38.50. (For more, see: Top 4 Alternative Energy Stocks for 2017).

Canadian Solar Inc.

Another solar company that is currently trading in an interesting position is Canadian Solar, Inc. (CSIQ). As you can see from the chart below, the price is currently trading near the resistance of a major trendline. In this case, the bulls have also managed to send the price above the resistance of the 200-day moving average, which suggests that the momentum is shifting. It is interesting to note that the 50-day moving average has also recently crossed above the 200-day moving average, which is a common long-term buy signal known as the golden crossover. Traditionally, this long-term buy signal is used by traders to mark the beginning of an uptrend. As discussed in the case of FSLR, the only resistance standing in the way of a true reversal is the dotted trendline. 

The Bottom Line

Alternative energy whether it is batteries or solar power are gaining in popularity, and many investors are looking for ways to invest. As discussed above, the charts of major solar-related assets are trading near influential turning points, and if the price can overcome nearby resistance, then the sector could be in the early stages of a long-term uptrend. (For more, see: 2017: A Turning Point for the Solar Industry).

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