We are long Sunrun (RUN) from a $16.89 entry on June 11. Below is a quick analysis of why we are long and what we are looking for in terms of trade expectations.

A failed breakout attempt above prior highs in late April led to a near 20% correction off the highs in May. From April 30 to May 31, $RUN dipped below the 50-day moving average intraday more than 10 times but always managed to bounce back. In early June, the price began to tighten up while holding above the 50-day MA at (b), which is generally a bullish sign. On June 7, the price cleared resistance at $16.25 and held. Although the close on June 7 wasn’t ideal, the price held above resistance and pushed higher on June 10. We entered on June 11, with a stop below the 50-day moving average minus some wiggle room.

RUN still has some work to do to in the short term as it needs to punch through $17 on volume.

If RUN can clear $17 on volume, then it could have a decent shot of becoming an explosive mover over a short period of time. What makes us believe that $RUN could become a significant winner?

Many traders stick to daily charts with 6-12 months of price action for analysis, but long term monthly charts work best for locating setups with explosive potential. On the monthly chart below, $RUN has been trading in a tight range for 3-4 months just below the all-time high. However, the price first broke out to new all-time highs in July of last year before stalling, so RUN has been in base mode for 11 months, building up a ton of energy to fuel the next breakout.

A breakout to new highs could lead to strong gains of +40% or more in 3 to 8 weeks if market conditions remain stable. Like anything else in trading, there is no guarantee that RUN will run will explode higher [it dropped more than 3% on Friday], but by focusing on as many multi-frame setups as possible we increase the odds of catching a big winner.