With investors turning toward traditionally defensive sectors such as electric utilities, Capital Power (CPX.TO) has been attracting renewed interest. Over the last few weeks, Capital Power has quickly climbed back up the rankings in the SIA S&P/TSX Composite Index Report, snapping out of a downtrend and rising from the red zone back up into the Green Favored Zone for the first time since September.
After bottoming out with the overall market in March of 2020, Capital Power (CPX.TO) came under accumulation and steadily advanced for about 18 months before levelling off in October of 2021 and shifting into a sideways trend. Last fall, the shares dropped back a bit in a normal correction but after successfully retesting support near $36.00, they have come under renewed accumulation. In the last few weeks, the shares have regained $40.00 and rallied to retest the top of their current trading range near $44.00.
A breakout from here would resolve the current sideways trend to the upside and indicate that the longer-term uptrend has resumed. Should that occur, measured moves from recent trading ranges suggest potential upside resistance may appear in the $48.00 to $52.00 range around the $50.00 round number. Initial support currently appears near $42.00 then the $40.00 round number.
Capital Power (CPX.TO) has been under accumulation for over two years. The last correction back in the fall of 2021 did not tip into a high pole warning meaning that the current bullish Double Top signal has been active for over a year since the spring 2021 breakout. Currently, the shares are trading near their previous high set back in September.
A close above $44.35 would complete a new bullish Double Top pattern and signal the start of a new advance. Should that occur, next potential resistance may appear near the $50.00 round number, then the $53.00 to $54.50 area based on vertical and horizontal counts. Initial support appears near $40.15 based on a 3-box reversal.
With a bullish SMAX score of 8, CPX.TO is exhibiting strength against the asset classes.
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