Eversource Energy (NYSE:ES) Shows Strong Technical Breakout Potential with High Setup Quality

Technical breakout setups are a favored method for traders aiming to benefit from stocks showing strong momentum and consolidation patterns. This strategy focuses on stocks with solid technical health (measured by the ChartMill Technical Rating) and a high-quality setup (quantified by the ChartMill Setup Quality Rating). Stocks meeting these conditions often provide good entry points, as they blend upward trends with periods of price consolidation, lowering risk while presenting potential gains.

Eversource Energy (NYSE:ES) stands out as a strong candidate, with both solid technicals and a clear setup. The utility company, which provides electricity and natural gas distribution in the Northeast, currently has a Technical Rating of 8 and a Setup Rating of 9, indicating a promising opportunity for traders.

Technical Strength: A Reliable Base

The ChartMill Technical Rating assesses factors like trend strength, moving averages, and relative performance. ES performs well due to several important traits:

• Positive Trends Across Timeframes: Both short-term and long-term trends for ES are upward, supporting the stock’s rise. This matches the broader market, where the S&P 500 is also trending positively.
• Solid Moving Average Support: The stock is above its 20-day, 50-day, 100-day, and 200-day moving averages, showing consistent buying interest. The rising moving averages further confirm the upward momentum.
• Relative Strength: While ES has lagged slightly behind the S&P 500 over the past year, it stays in the upper half of its 52-week range, indicating stability.

A closer look at the technical report reveals more support levels, including a key area between $64.28 and $66.06, formed by multiple trendlines and moving averages. This acts as a buffer against declines, simplifying risk management.

Setup Quality: A Tight Consolidation Pattern

The Setup Quality Rating examines consolidation patterns, volatility, and entry/exit points. ES scores a near-perfect 9, signaling an ideal setup for a potential breakout. Key details include:

• Lower Volatility: The stock has traded in a narrow range between $63.23 and $66.88 over the past month, a sign of reduced volatility that often comes before a breakout.
• Clear Resistance and Support: Resistance sits just above the current price at $66.24 to $68.40, while support is strong near $66.06. This creates a well-defined risk-reward scenario for traders.
• Pocket Pivot Signal: A recent pocket pivot, a bullish volume/price pattern, adds further evidence of institutional buying interest.

The setup suggests an entry point at $66.89, just above the recent high, with a stop-loss at $64.78 (below the 10-day low). This caps the potential loss at 3.15%, a reasonable risk for traders using careful position sizing.

Why This Matters for Breakout Traders

The blend of strong technicals and a high-quality setup is key to the breakout strategy. A high Technical Rating confirms the stock is in a steady uptrend, while a high Setup Rating pinpoints the best entry points—often after a consolidation phase. ES demonstrates this, offering a low-volatility base with clear breakout and stop levels.

For traders looking for similar opportunities, the Technical Breakout Setups screen provides a filtered list of stocks meeting these conditions.

Disclaimer: This analysis is for informational purposes only and should not be seen as investment advice. Always do your own research and apply risk management strategies before trading.