Takeaways
- The shares of Vistra, a nuclear power provider that has become a favorite among AI investors, fell for the third consecutive day on Thursday.
- The price has broken below the lower line of a pennant-like pattern, which could be a precursor to further selling.
- Investors should watch major support levels on Vistra's chart around $105 and $85, while also monitoring important overhead areas near $139 and $170.
The shares of Vistra (VST), a nuclear power provider that has become a favorite among AI investors, fell for the third consecutive day on Thursday.
Vistra, a company that invests in AI, has been under pressure since Joe Tsai – the chairman of the ecommerce giant Alibaba (BABA), rekindled concerns about AI spending and warned investors on Tuesday of an AI data center inflation bubble.
Vistra was one of the biggest gainers in the S&P 500 last year—rising about 250%–amid surging demand for electricity to power energy-intensive AI infrastructure. The stock has dropped 38% since late January when it reached a record-breaking closing high. Stocks fell by nearly 4% to $119 on Thursday.
Below we break down Vistra’s technicals and identify major prices levels that investors might be watching.
Pennant Pattern Breakdown signals further selling
Vistra shares formed pennants after finding buying interest below the 200-day MA, a chart pattern which signals a continuation in the stock’s recent decline.
The price fell below the lower trendline of the pattern on Wednesday, setting the stage for possible further declines. The stock’s recent decline coincides with the relative-strength index (RSI), which has retreated below the 50-point threshold, indicating a resumption in bearish price momentum.
Let’s identify two major support areas on Vistra chart worth monitoring amid the possibility of further declines.
Major Support Levels to Watch
A convincing close under the 200-day MA would see the shares fall to the $105 area. The stock finds support at this level near the March low as well as last May’s prominent high.
The bulls’ inability to defend this important technical level opens the doors for a drop to around $85. Investors can look for opportunities to buy in this area, near a line that connects a lower range from a consolidation period last June with the August peak.
This area also closely aligns to a projected bars pattern downward target when extracting price bars that make up the sharp decline in the stock’s price from late February into early March, and repositioning from the pennant’s breakdown point.
Important Overhead Areas for Monitoring
Investors should monitor the $139 range during stock upswings. The shares could face selling pressure around the high of the pennant and a series peak and troughs in the chart going back to the beginning of October last year.
Vistra’s shares could return to higher prices if there is a breakout above this level. Investors may choose to lock-in profits near the stock’s November peak and a short period of consolidation located just below its record high.
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