IREN Limited Is Breaking Out Again (Technical Analysis)

Summary IREN Limited is up over 94% since I first recommended it, but was also down over 30% off my initial buy price at one point. This thing is volatile! The fundamentals of the company have changed little in the last three months, but the technical charts show a lot of promise still. I break down and annotate a chart fully, and discuss both the short- and medium-term outlooks for IREN stock. While I am not personally adding more to my position, I am not trimming, and believe that we could see more gains ahead. www.investopedia.com/terms/p/ppo.asp Introduction It’s only been a few months since I gave a buy rating to IREN Limited ( IREN ), a Bitcoin ( BTC-USD ) miner and AI cloud provider, that focuses on renewable energy infrastructure built alongside their facilities. Welcome to investing in 2025, that’s what’s on the menu now: a mid-cap company whose description includes the words: AI, cloud, Bitcoin miner, renewable energy, and who evokes the idea of energy autarky as a means of being a profitable mining operation. Well, since I gave the company a buy rating back in March, it’s up over 90%. Seeking Alpha Look, I don’t make the rules about what makes money in today’s market. If it were up to me, we’d all be investing in dividend stocks like good little investors should. It’s not up to me, and I just have to tell it like it is; I’m an arbiter of the market, not a director of it. It doesn’t matter how easily comparable it is to the Dot Com Bubble; I’m here to make money. We’ll talk about the downside later. Don’t worry. For now, what I have to say is that IREN has a literal business on the ground that is impressive despite the absurdity of the description, and for serious investors (not just traders looking to make a buck on a stock), I recommend taking a look at this article from my colleague First Principles Partners that discusses the micro of the business with more up-to-date data that I went over it in my first article on IREN back in March. I don’t have much of an update on IREN’s story from my first coverage back in March, other than that the growth is hitting targets, which is a good thing. Instead, I thought I’d review what I see in IREN’s chart, as the technical outlook on these kinds of stocks is one of the ways in which I direct my personal investments, and make decisions on when to add or shed stocks. After the significant run-up, IREN has been on, it’s only fair that we check in on it to see what the chart tells us may happen next. IREN Technical Analysis I’m taking the same format here as I used in this article on Nebius N.V. ( NBIS ). To borrow from that article, here is some context on technical analysis: Here is the chart I’m looking at, daily candles going back [six] months… See the legend at the top of the chart for the other indicators I employ. Before we get to the chart, two things for context: I like to use this to forecast for a [30-60 day] period ahead, but I tend to watch charts like these weekly or during big moves… These discussions can be helpful for longer-term investors if they are trying to time their buys and sells for re-allocations, or time the pricing of options (e.g., buying protective puts at low prices, selling calls at highs, etc.). I recommend opening this image in a second window and half-screening each of them to be able to have both the image and annotation explanations side-by-side. There’s a lot of info in this one image. Okay — show me the chart already! Author Annotations in Red (Barchart) Here’s a run-down of what I’m looking at in the chart, corresponding to the numbers in the annotations above: I slapped a light gray psychological resistance line around the last high. I see an inverse head and shoulders pattern in the drop and bounce IREN had over the last few months, as it responded to political catalysts, but I also see it across most high-beta stocks right now, just like NBIS . Here is “the textbook image” of the pattern from Investopedia to compare to below. It’s not perfect, but they never are. Let me know if you see something different in the comments. Investopedia Just like in the example above, we’re seeing elevated volume as we break out through the Bollinger bands (white lines) shown by #5 and toward the point in #1, which the stock is now very close to. If I am correct here, and we see a new high with the breakout, we could expect this high to become a new resistance for the stock or around $14 in IREN’s case. I am not a huge volume chaser, so beware that it could reverse quickly, especially if we get a secular catalyst that pulls down stocks in general. This corresponds to those four circles, which highlights the various “crossover” events in the exponential moving averages. The blue line (20-day EMA) has very bullishly crossed over the yellow (50-day EMA), purple (100-day EMA), and maroon (200-day EMA) lines on this run-up and is solidly above them. While the 20-day movement is bullish, the largest circled event is what piqued my interest here. We are also seeing a bullish crossover of the yellow line over the purple and maroon, and now the purple over the maroon as well. These are bullish indicators on their own, but together and in such quick succession typically imply that there is more “gas in the tank”, and that gas can be measured as the distance between these indicators. While the blue line is so high up, over 10, and the maroon line down at 8.85, there is a healthy lead so far that implies the momentum can continue without more positive catalysts. Here is where we hit our first “woah moment” in the chart. Breaking out of the Bollinger bands (white lines) shows a break from standard deviation, which can cause odd movements in stock price, like sudden falls at market open or close as the candles tend to be “shunted” so to speak, back into the white bands. It is not to say that the stock has to fall when it breaks these bands, but there are only two ways this scenario ends, and we can see historically in the chart that it ends one of two ways every time: The stock price is shunted back down and a large red candle forms. The bands expand and give more room for the stock, which results in consolidation. Either way, both of those outcomes are bearish for current investors and could give a reason to “let it play out” for investors considering opening a position now. Since I already have a position and do not want to add (I am happy with my current position size), I am taking this into consideration, but not letting it sway my buy rating. The Relative Strength Index ( RSI ) momentum gauge is our second yellow flag, as it is very high, nearing oversold levels (80), and trending in that direction. This could be another sign of momentum running out, although it is notable that IREN has traded at a high RSI before, and done so for an extended period of time. That was also the last time it notably broke out of the bands, and was punished in early June with a pullback. I’m not kidding about the stocks getting shunted in by these bands. The Moving Average Convergence/Divergence indicator ( MACD ) just flashed a bullish signal, with the crossover of the signal lines (circled). A positive reading on the histogram is bullish, but it is dull. This is common across a lot of high-beta stocks currently. The Percentage Price Oscillator (PPO) is also bullish, but dull. The crossover (circled) is bullish, and so is the positive histogram reading, indicating the potential for momentum to continue picking up as the price breaks out to new (recent) highs. Let’s take a look at the longer term, pulling back to the one year. This gives more perspective about breaking out above $14.15, as that became a heavy resistance point back in December. Barchart I didn’t move the gray line from #1 earlier, so you can see how it was effectively the top for a while post-break-out-fake-out in November-December 2024. If I’m right about the pattern we’re seeing, this could become heavy support for the stock moving forward around the $14 mark. This view also makes the breaking out of the Bollinger bands more noticeable and pronounced. Expect a pullback, likely sooner rather than later, or a rapid expansion of the bands that could signal far more “gas in the tank” and room to go. They work in extremes in these cases, but of course, they do — they’re reacting to extreme movements in the stock price. Quick Word About Managing Risk IREN is very volatile, and even though I’m bullish about it based on these charts, I could be very wrong. There are a lot of risks with IREN, namely: Correlation to Bitcoin, meaning if Bitcoin falls, IREN will too in sympathy. High beta, meaning if the market crashes, IREN will too in sympathy. Small-cap risk, as it can be thinly traded at times and “gap up and down,” meaning it can be hard to get consistent entry and exit points. Take positions prudently, and with precision as much as possible with these kinds of stocks; they are not market order stocks. One should consider managing their risk in a few ways like position sizing to ensure that if the stock gets cut in half again, you aren’t out too badly, or employing options to protect your downside like a collar strategy . Conclusion IREN Limited ( IREN ) is still chugging along since my last review back in March when I covered the fundamentals of the company, but I can only use “chugging” in response to its physical business growth. Since then, in the stock market, it has had a huge sell-off and massive run-up, demonstrating just how volatile these kinds of small-cap, cutting-edge companies are, and how risky they can be for one’s portfolio. The stock operates in a niche that is prone to bubble behavior, but the chart itself shows that the run-up isn’t over yet. While the technicals are not 100% aligned in this, they never are, and I believe that the overall picture is still bullish for IREN. We may actually be finding a floor if the pattern I’m seeing forming in the stock comes true; I’ve been seeing this pattern in a lot of high-beta stocks lately, which may suggest a pattern among these tech companies, reinforcing the idea that the biggest risk to IREN is currently the pull of the market and less of its fundamentals. Thanks for reading.

Source: Seeking Alpha