Edison International (EIX) is another power utility that's looking toppy right now. Despite what looks like a strong chart, Edison is only up around 5.3% since the first trading day of January, underperformance that's likely to be at the top of shareholders' minds as this stock turns over.
Edison's chart pattern is pretty straightforward: It's a rounding top. The rounding top is just what it sounds like, a gradual rollover in shares from an uptrend to a downtrend. The pattern indicates a slow shift in control from buyers to sellers. The fact that EIX's dashed uptrend line got broken this month adds some extra evidence to the downside potential of this setup.
The fact that a support level in RSI (at the top of the chart) got broken is negative for shareholders as well. Remember, momentum is a leading indicator of price, so a break in support for RSI means that EIX is dropping at a faster rate than before. I'd be a seller here.
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