Examining the Potential of Penny Stocks through Technical Analysis …

Technical analysis (TA) is a method that involves studying stock chart patterns and trends to make informed investment decisions. While it may seem complex, even beginners can implement certain TA strategies to enhance their investing approach successfully.

TA can be particularly useful when analyzing penny stocks due to their high volatility, provided there is enough trading volume to support the identified patterns.

Below are some penny stocks with intriguing technical setups. Please note that the setups described may have changed by the time you read this article, so it is essential to conduct your own research and exercise caution, as penny stocks are known for their volatility.

New Stocks to Watch

Gaotu Techedu Inc. (GOTU)

Gaotu Techedu Inc. (GOTU) is a Chinese technology education company with a market capitalization of around $600 million as of January 2, 2023, positioning it as a small-cap firm. Established in 2014 and headquartered in Beijing, the company specializes in offering online kindergarten-12th grade courses globally, along with online after-school tutoring for K-12 students in mainland China.

Despite reaching a high of $149.05 in January 2021, GOTU experienced a prolonged downtrend that saw its stock price drop to less than a dollar per share in November. However, the stock has shown signs of recovery since then, with a notable price increase to $4.25 in late December 2022. While there was a brief pullback, the stock appears poised to retest its December highs.

Vyant Bio Inc. (VYNT)

Vyant Bio Inc. (VYNT) operates as a small-cap company in the healthcare and biotechnology sectors, with a market capitalization of approximately $4 million as of January 6. Founded in 1999 in Cherry Hill, New Jersey, the company focuses on drug discovery for complex neurodevelopmental and neurodegenerative disorders.

Following a spike to $84.50 on February 10, 2021, VYNT entered a prolonged downtrend throughout 2021 and 2022. However, a gap up on January 5, 2023, suggests a potential reversal, with the gap acting as a support level. Maintaining above this support could indicate further positive movements in the stock price.

Safe Bulkers Inc. (SB)

Safe Bulkers Inc. (SB) is a small-cap shipping stock in the industrials sector that began a downtrend in June 2022. Finding support at its 200-day moving average, the stock traded sideways, forming higher lows over time.

Notable price divergence and the moving average convergence divergence (MACD) signal a potential shift from the prior downtrend. With the price now above the 50-day moving average and the moving average trending upwards, a break to the upside could confirm the end of the downtrend and a possible entry into a new uptrend.

Atara Biotherapeutics Inc. (ATRA)

Atara Biotherapeutics Inc. (ATRA) is a small-cap biotech stock in the healthcare sector that saw its price drop from $28.20 in December 2020 to under $3 in August 2022.

However, signs of optimism emerged with a successful test of previous lows in December 2022, as the stock found support at the August 2022 levels before moving higher. This positive momentum indicates the potential for a shift in the stock’s trajectory.