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Examining Penny Stocks with Technical Analysis for September 2022

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. Please note that penny stocks are notoriously volatile.

New Stocks to Watch

Eos Energy Enterprises, Inc. (EOSE)

Eos Energy Enterprises, Inc. (EOSE) designs and manufactures batteries for the electricity industry, The company was founded in 2008, and it began trading on the Nasdaq in June 2020. After peaking on Jan. 13, 2021, at a high of $31.95, the shares went on a sustained downtrend, touching a low of $1.00 on May 20, 2022.

Eos Energy stock appears to have bottomed. It recently completed a double bottom pattern with the second low higher than the prior one. Its 50-day moving average is turning upward. On July 6, 2022, shares gapped up on very high volume, which is positive for the stock. Price has completed the first leg of its uptrend and has recently reacted to find support around the area of the 50-day moving average. If price can rise above the 50-day moving average and remain above it for a decent period of time, that portends well for the stock.

Daily price chart of Eos Energy Enterprises, Inc. (EOSE)


Coeur Mining, Inc. (CDE)

Coeur Mining, Inc. (CDE) is a small-capitalization company in the materials sector. It engages in the exploration and mining of gold and silver. Its daily chart recently completed the formation of a positive divergence with the relative strength index (RSI). A positive divergence forms when price is making lower lows, but the indicator is not. This is often evidence that price may rise. Price currently appears to be making a higher low.

Coeur Mining's 50-day moving average is still below its 200-day moving average. Also, the 50-day moving average has not yet turned upward. Since the moving average is a lagging indicator, this is not necessarily a negative. Price needs to turn upward before the moving average changes direction. It is wise to be cautious and wait for a price break above the 50-day moving average to take a position.

Daily price chart of Coeur Mining, Inc. (CDE)

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Calithera Biosciences, Inc. (CALA)

Calithera Biosciences, Inc. (CALA) is a small-cap company in the healthcare sector. It is a biopharmaceutical company focusing on developing small molecular drugs that can be used in treating tumors and activating cancer-fighting immune cells.

Calithera's stock price seems to be bottoming. It has been in a basing price pattern since April 2022. Traders should look for price to break above its 50-day moving average. The RSI has risen from a low of about 30 to 50, which is positive for the stock.

Daily price chart of Calithera Biosciences, Inc. (CALA)


ESSA Pharma Inc. (EPIX)

ESSA Pharma Inc. (EPIX) is a clinical-stage pharmaceutical company. With a market capitalization of $55 million as of this writing, ESSA Pharma is a micro-cap stock. But its chart looks promising. After falling steeply for much of the past year, the stock is trading sideways in a consolidation pattern. This might be early signs of accumulation.

ESSA Pharma's RSI has risen from the 20 level at June 2022 to about 37.16, which is promising. Traders may want to wait for shares to break above the 50-day moving average on high volume before taking the plunge.

Daily price chart of ESSA Pharma Inc. (EPIX)


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