How First Solar Can Rally to New Highs

First Solar and solar stocks in general are rallying on Wednesday on results of the Georgia Senate runoff elections. Let's revisit the chart now.
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With it looking more likely that Democrats will take control of Congress, solar stocks were off to a hot start on Wednesday.

Although the overall market was wavering in early trading - particularly tech - solar stocks like First Solar  (FSLR) - Get Report, cannabis stocks and infrastructure plays were being snapped up by buyers.

For First Solar’s part, the stock was rising about 8% and hovering near $100 a share.

Will a Democrat Senate, House of Representatives and White House be enough to keep this stock’s newfound momentum alive?

To be fair, First Solar has had momentum for awhile. Even after Tuesday's 9% fall following a double-downgrade from Goldman Sachs, shares were still up 223% from the March low. 

In just the prior three months, shares were still up 35%.

But this could certainly be the spark that First Solar needed to retest its 52-week highs. Let’s look at the chart.

Trading First Solar

Daily chart of First Solar stock.

Daily chart of First Solar stock.

Each dip over the last few months has been met with buyers.

Shares popped in October, then faded to support. The stock again rallied coming into December before dipping to support, while the pattern has repeated coming into January.

Notice how the 10-week moving average has been guiding First Solar stock higher. That’s the moving average that stepped in as support on Tuesday and prevented shares from testing the 50-day moving average and VWAP support.

With Wednesday's rally, First Solar is pushing through the notable $98 area.

Bulls want to see shares clear the $100 mark and test into this week’s high near $105. Above that puts the December highs in play near $109.

If shares can clear $110, it could put the 261.8% extension from the summer pullback in play near $118.

On the downside, let’s keep an eye on the $98 level. A close below this mark could put a retest of the 10-week moving average on the table, and potentially the 10-day moving average and VWAP area near $90 as well. 

As long as these areas hold though, First Solar still looks OK for bulls. However, a break below could put $80 in play.