All of the action in Trina Solar (NYSE: TSL) off of the July high at 22.45 through today's trading has the right look of a mature (read: nearly complete) bullish coil pattern, which if accurate means that the next significant directional move should be to the upside in a thrust out of the coil towards a target zone of 25.00/50.
Only a decline that breaks and sustains below key support at 21.90-21.60 will damage the coil and morph the pattern into a top rather than a bullish continuation.
TSL, which reports tomorrow and may see some earnings-reaction swings, should benefit near-term from UBS's upgrade today of First Solar (FSLR). In addition, after the FSLR upgrade, Collins Stewart noted: "Trina Solar (TSL) remains a top pick in sector… Trina Solar has one of the lowest cost structures in the industry, a strong balance sheet and strong brand. Shares are Buy rated with a $29 price target."
Finally, there is a China connection to my technical preference for TSL, which is based in Changzhou. China energy costs and demand for cleaner sources of fuel argue strongly for a huge presence in solar in and from China. In addition, the technical outperformance of the China market is a theme to my outlook now and in the months ahead.
Originally published on MPTrader.com.