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Fan Yang

Applied Optoelectronics Inc. (AAOI) Developing a Price Bottom

Applied Optoelectronics Inc. $AAOI has been consolidating since June 2019 following a persistent decline since the highs in 2017, which briefly breached $100 a share. Price has broken below $9 in 2019, but has mostly held above $8.50. 

AAOI Daily Chart

(click to enlarge)

Consolidation; Price Bottom?
- As we can see on the daily chart, AAOI has been consolidating above $8.50, and mostly under $11-$11.50 area.
- In the past couple of weeks, price has bounced off the support and is now challenging the resistance area.
- I think $12, which was a previous support, will still be a key resistance
- But there are already some signs of a price bottom.
- The bullish price action in late August/early-September has been sharp. 
- The RSI has held mostly above 40 and is now pushing at 70.
- These are signs that at least bears are no longer in control. 
Key Support:
- As we can see on the weekly chart, this price bottom is being formed right on top of a historic low that was just above $8.00.
- In the past 3 times when price bounced up from this area, it at least pushed to $22 area. 
- Therefore, I think if price pushes above $12, I think there is a chance AAOI would bounce back up to $20 even if it does not turn bullish. 

AAOI Weekly Chart

(click to enlarge)

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