AeroVironment (AVAV) Price Forecast: Bottoming Signals Point Toward Further Gains

Bottoming Evidence Builds from Key Support

Shares of AeroVironment, Inc. (AVAV), a defense technology company, are showing signs of strengthening and suggesting that a bottom may be complete or close to completion. The stock hit a corrective low of $135.20 in June, thereby completing an 88.6% Fibonacci retracement of the prior advance, with the retracement level at $138.23.

That support zone aligned with a rising trendline and lower channel boundary, as well as the peak from January 2021. This confluence of support was further confirmed this week by a decisive reclaim of the 200-week moving average at $168.56 and the 20-week moving average at $172.81.

Weekly Momentum Confirms the Shift

A higher weekly low of $150.25 was established this week, along with a four-week high of $187.08. Given the weekly close of $186.73, a reclaim of the 20-week moving average was confirmed. That was the first weekly close above that indicator since late January, very early in the retracement that followed the October peak of $417.86. Those two trend indicators now mark key potential support zones during pullbacks.

Daily Confirmation Raises the Bar

On the daily chart, the 100-day moving average was reclaimed on Friday, with the session ending in the first daily close above that average since it last failed as support in January. Signs of strength on both the weekly and daily charts suggest further upside for AVAV. If that strength persists, the characteristics of pullbacks should provide additional useful information. To further confirm strength, AVAV needs to signal a reversal of the downtrend in its price structure by recovering above the lower swing high at $200.38. That is also a monthly high, currently marking resistance for two months, although August is not yet complete.

$200.38 Becomes the Next Confirmation Level

The key initial upside target looks to be the higher swing low from May at $217.77. A recovery of that level would signal a further reversal in the downtrend structure, following an initial reversal signal above the lower swing high from current levels at $200.38. The 200-day moving average, currently near $230.80, also provides an initial upside target. Since it is falling, it may converge with the $200.38 price zone before it is tested. Therefore, the ability to hold the newly reclaimed weekly and daily moving averages during any pullbacks will be important.

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