An industrial goods player that's starting to trend within range of triggering a major breakout trade is American Superconductor (AMSC), which provides megawatt-scale solutions worldwide. This stock has been moving to the upside over the last three months, with shares higher by 14%.
If you take a glance at the chart for American Superconductor, you'll notice that this stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $1.25 to its recent high of $1.78 a share. During that uptrend, shares of AMSC have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AMSC within range of triggering a major breakout trade above some key near-term overhead resistance levels.
Traders should now look for long-biased trades in AMSC if it manages to break out above its 200-day moving average of $1.70 a share to some more near-term overhead resistance at $1.78 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 763,864 shares. If that breakout materializes soon, then AMSC will set up to re-test or possibly take out its next major overhead resistance levels at $2.20 to around $2.40, or even $2.68 a share.
Traders can look to buy AMSC off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $1.52 or around its 50-day at $1.45 a share. One can also buy AMSC off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.