Photo: Courtesy Plug Power

Plug Power Inc PLUG was consolidating 4% lower on Tuesday after surging higher on Monday in tandem with a number of other clean energy stocks such as FuelCell Energy Inc FCEL and Sunrun Inc RUN.

The worsening humanitarian crisis in Ukraine may force harsher sanctions on Russia’s oil, gas and coal, which in turn may cause nations to hasten the switch to alternative energy in order to become less dependent on the former Soviet country.

The European Union, which is heavily dependent on Russian natural gas, oil and coal exports, has been slow to enact sanctions against Russian energy, but as further evidence surfaces that Russian troops are committing war crimes against Ukrainian civilians, major importers such as Germany are feeling an increasing pressure to act.

Plug Power develops hydrogen fuel cells to replace batteries widely used in equipment and vehicles. While not offering an alternative to fuel, Plug Power's fuel cells look set to gain further ground as Western governments feel increasingly forced to make the switch to clean energy.

The FuelCell Chart: After soaring more than 12% higher on Monday, Plug Plug power was consolidating on Tuesday with an inside bar pattern on the daily chart. In this case, the inside bar leans bearish because Plug Power was trading higher before creating the pattern, but traders and investors can watch for a break up or down from Monday’s mother bar later on Tuesday or on Wednesday to gauge the future direction.

The inside bar pattern was taking place on lower-than-average volume, which further confirms a period of consolidation. By mid-morning, only about 7 million Plug Power shares had exchanged hands compared to the 10-day average of 19.67 million.

The consolidation is needed because Plug Power’s relative strength index (RSI) was registering in at about 70% on Monday. When a stock’s RSI reaches or exceeds that level it becomes overbought, which can be a sell signal for technical traders.

Plug Power is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The eight-day EMA has been guiding the stock higher since March 18 and acting as a strong level of support.

• Bulls want to see continued consolidation and then for big bullish volume to come in and push Plug Power up over the highest price in the mother bar candlestick. There is resistance above $34.38 and $39.33.
• Bears want to see big bearish volume come in and break Plug Power down from the mother bar, which will cause the stock to lose support at the eight-day EMA and throw the stock into a downtrend. Plug Power has support below at $28.80 and $26.87.

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