FuelCell Energy, Inc FCEL was shooting up over 14% higher on Monday in unison with the general markets, where the SPDR S&P 500 SPY was up about 1%.

FuelCell has been beaten down hard since Feb. 10, 2021, when the stock hit an all-time high of $29.44, to trade at just above the $4 mark on Monday.

Short interest on the stock has increased massively recently, which combined with other FuelCell statistics could make it ripe for a short squeeze. Of FuelCell’s 353.39 million share float, 66.64 million shares, meaning 18.18%, are held short. The number represents a big jump from the 45.79 million shares held short in December.

FuelCell also has a high level of institutional ownership, with firms holding almost 40% of the available shares.

The FuelCell Chart: On Monday, FuelCell broke up through a descending trendline that had been holding the stock down since Nov. 16. Below the trendline, FuelCell had been making consistent lower highs and lower lows as it traveled in a steep downtrend from the $10.57 level to Friday’s low-of-day at the $3.40 mark.

FuelCell may be in for a trend change, however, because on Monday the stock popped up above the Jan. 26 high-of-day, causing the stock to print a higher high above $4.21. The stock will eventually need to print a higher low above $3.40 to confirm the trend, which could also give bullish traders who are not already in a position an entry point.

Technical traders may have predicted at least a bounce in FuelCell’s stock was on the horizon because between Jan. 18 and Friday, the stock’s relative strength index (RSI) was measuring in below the 30% level. When a stock’s RSI nears or falls below the level it becomes oversold, which can be a buy signal.

FuelCell is trading above the eight-day exponential moving average (EMA) but below the 21-day EMA, which indicates the tide may be turning bullish. If FuelCell can regain the 21-day EMA and continue to trade above it the eight-day will eventually cross above the 21-day, which would be bullish.

• Bulls want to see sustained big bullish volume come and push the stock up over the 21-day, which will cause the stock to regain support near the $4.50 level. Above the area, there is resistance at $5.77 and $7.17.
• Bears want to see big bearish volume come in and drop FuelCell back down under the descending trendline, which would then create a bull trap. FuelCell has support at $3.36 and $2.73.

(Click on image to enlarge)