A Major Technical Breakdown For Kandi Technologies Stock?
Shares of Kandi Technologies Group Inc (NASDAQ: KNDI) have been extremely volatile over the past week. After dropping 7.0 percent on December 12 and 9.2 percent on Monday, Kandi stock came roaring back on Tuesday with a 6.6 percent jump. However, from a technical standpoint, some major damage may have already been done.
Related Link: Why Shares Of Kandi Technologies Are Trading Higher
The Breakdown
Since breaking above $10 for the first time at the tail end of 2013, Kandi stock tested and found support at around $11.00 no less than six times this year, establishing a strong support line. After peaking right around $22.50 in March and then again in July, the stock had established a clear technical resistance line.
Since the formation of the second peak in the bearish double top pattern, Kandi stock has fallen about 50 percent.
On Monday, the stock dipped as low as $10.30, seeming to break below the well-established support line.
Death Cross
Kandi stock recently experienced its first Death Cross formation since early 2013. This bearish trading signal occurs when the 50-day simple moving average (SMA) crosses below the 200-day simple moving average and is used as a sell signal by some technical analysts.
Potential Technical Bright Spots
There are two possible technical reasons for Kandi shareholders to hope for a bounce in the next few days. First, the last time the stock's relative strength index (RSI) reached similar levels, the stock spiked over the following month.
Second, although volume was above average for Kandi over the past few days, it was not the type of massive volume that would typically accompany a major technical breakdown.
Kandi stock bounced back on Tuesday, but its behavior over the next couple of days is critical from a technical perspective.
Shares traded recently at $11.54, up 2.9 percent Thursday afternoon.
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