SunRun Stock Plunged 40% Tuesday—Watch These Key Price Levels
SunRun shares plummeted Tuesday, leading a steep sell-off in solar energy stocks after the Senate maintained the full removal of clean-energy tax credits in the budget bill.
A chart pattern that closely resembles a falling three methods has recently emerged, signaling a continuation of the stock's long-term move lower.
Investors should watch key support levels on SunRun's chart around $4.75 and $4.33, while also monitoring important overhead areas near $8.50 and $13.25.SunRun (RUN) shares plunged Tuesday, leading a steep sell-off in solar energy stocks after the Senate maintained the full removal of clean-energy tax credits in its version of the budget bill.
The move comes after SunRun and other bellwether solar names tumbled last month after the House passed a tax and spending bill that would end tax credits for wind and solar projects in 2029, years earlier than a previous version of the bill. Following today's development, Citi maintained its sell rating on residential solar stocks and cautioned that it expects a 'sharp pullback' in shares of SunRun, SolarEdge Technologies (SEDG) and Enphase Energy (ENPH).
SunRun shares fell 40% on Tuesday, closing the session at $5.78. The stock has lost three-quarters of its value since hitting its 52-week high last August, weighed down by uncertainty surrounding the sector caused be policy changes, a clouded regulatory outlook and reduced demand.
Below, we take a closer look at SunRun's weekly chart and use technical analysis to identify key price levels worth watching out for.
Since topping out in early 2021, SunRun shares have remained entrenched in a steady downtrend, with losses in the stock accelerating after the 50-week moving average (MA) crossed below the 200-week MA in September 2022 to form a death cross.
More recently, a chart pattern that closely resembles a falling three methods has emerged, signaling a continuation of the stock's long-term move lower. What's more, the relative strength index has fallen back below its neutral threshold, confirming a resumption of selling momentum.
It's also worth noting that trading volume has increased in recent weeks, indicating growing interest in the stock from both retail and institutional investors.
Let's identify two key support levels to watch on SunRun's chart if the price keeps falling and also locate overhead areas worth monitoring during future recovery efforts in the stock.
Firstly, it's worth keeping a close eye on the key $4.75 level. This area may attract strong buying interest near an established floor of support that formed on the chart between October 2016 and May 2017.
A breakdown below this level could see the shares drop to around $4.33. We projected this level by taking a look what happened when the stock dropped by more than 40% in a week during the March 2020 pandemic-driven sell-off. On that occasion, the shares dropped a further 25% the following week before staging a dramatic recovery. Therefore, a decline of a similar magnitude from Tuesday's close of $5.78 projects a downside target of $4.33, assuming the stock ends this week around its current trading levels.
However, keep in mind this analysis is speculative, given the stock fell by more than 40% in a week last month and has kept moving lower.
During recovery efforts in the stock, investors should monitor the $8.50 area. The shares may face renewed selling pressure in this region near prominent troughs that formed on the chart in March 2020 and October 2023.
Finally, buying above this level could see an upswing toward $13.25. Investors who have bought SunRun shares at lower levels may seek to lock in profits at this location near last month's high, which also closely aligns with a range of corresponding trading activity on the chart extending back to mid-2018.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.
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