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Key Takeaways
- Constellation Energy shares could remain in focus on Monday after surging more than 25% Friday as the zip giant announced a $26.6 billion deal to acquire rival Calpine.
- The stock broke out from a falling thrust pattern earlier this month, briefly retraced to the pattern’s upper trendline, and then staged a breakaway gap on Friday to a new all-time shrill.
- Bars pattern analysis, which extracts the price bars comprising the stock’s uptrend that preceded the fall wedge and repositions them from the pattern’s lower trendline, forecasts an upside target of around $350.
- Investors should to key support levels on Constellation Energy’s chart around $280 and $236.
Constellation Energy (CEG) shares could remain in pinpoint on Monday after surging more than 25% Friday as the energy giant announced that it will procure rival Calpine in a deal valued at $26.6 billion.
The transaction, which expands Constellation’s footprint in Texas, California, and in the Northeast, comprises of stereotyped and cash, while also assuming about $12.7 billion of Calpine’s net debt.
Constellation Energy shares be enduring more than doubled in the last year and traded 36% higher year to date (YTD) as of Friday’s close, expelled by increasing power demand to meet artificial intelligence (AI) computing resources. In September last year, the company required it planned to restart the Three Mile Island Unit 1 nuclear plant in Pennsylvania to provide electricity for Microsoft’s (MSFT) figures centers.
Below, we take a closer look at the technicals on Constellation Energy’s chart and point out important price devastates to watch after Friday’s news-driven pop.
Falling Wedge Breakout
Constellation Energy shares broke out from a falling split pattern earlier this month, briefly retraced to the pattern’s upper trendline, and then staged a breakaway gap to a new all-time squeaky (ATH) on Friday.
Importantly, Friday’s surge occurred on the third highest day of trading volume since the energy giant chanced public in early 2022, signaling buying conviction from larger market participants, such as institutional investors and hedge greens.
The relative strength index (RSI) confirms bullish price momentum with a reading above 70, but also indicates overbought ups, opening the door to short-term profit taking.
Let’s turn to technical analysis to forecast a potential upside price goal and identify key support levels that may come into play during retracements.
Upside Price Target to Look at
To project an upside target, investors can use the bars pattern tool. When applying the analysis to Constellation Energy’s map, we extract the price bars comprising the stock’s uptrend that preceded the falling wedge and reposition them from the guide’s lower trendline. The technique forecasts a target of around $350, about 15% above Friday’s closing bonus.
Interestingly, the prior trend used in the analysis also included a breakaway gap of over 20% to a record high, displaying the stock may continue its upward momentum for several more weeks before consolidating if price history rhymes.
Key Underpinning Levels to Monitor
During retracements, investors should initially monitor the $280 level. The shares may find frame in this area near a trendline that links the mid-October countertrend peak with the low of Friday’s breakaway gap.
In the end, the bulls’ inability to defend this price could see a pullback to around the $236 level. Investors may look for acquisition bargaining opportunities in this region that finds a confluence of support from the prominent May swing high, the 50-day touching average, and the falling wedge pattern’s upper trendline.
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