Penny Stocks to Buy Using Technical Analysis for February 2022

Technical analysis (TA) involves the careful study of a stock’s chart patterns and trends. Although this set of skills may seem daunting at first, even beginners can incorporate a few select TA methodologies into their investing strategy to great success. TA can be especially helpful when predicting the movements of penny stocks because of their volatility—provided there is enough trading volume to back up the patterns you’re trying to find.

Below, you’ll find a list of some penny stocks with interesting technical setups. Remember to move quickly and exit your position if the stock isn’t behaving the way you expect it to, because this may mean that the trend or signal has changed or failed.

ESS Tech, Inc. (GWH)

At its current price of $5.30, ESS Tech, Inc. (GWH) costs a little more than your average penny stock. However, this premium may be warranted by its extremely low relative strength index (RSI) of 14.68, which suggests that the stock is oversold and due for a bullish trend reversal. In fact, as of the last day of January, ESS Tech stock appeared to already be climbing out of its rut, charting a 5% gain as of the time of writing this report and showing a bullish white marubozu candlestick on its chart. 

If we continue to see increasingly higher prices over the next few days, then you can consider the RSI and candlestick signals to have been correct. However, if ESS stock goes back down again, then they will have failed, and it may be time to consider exiting the position.

New Oriental Education & Technology Group Inc. (EDU)

Given all the volatility and negative news flow in this space, New Oriental Education & Technology Group Inc. (EDU) is most definitely a highly speculative play for only the most risk-embracing readers out there, in my view. Should you be willing to take the risk, however, there could be plenty of upside here based on the bullish hammer candlestick that appeared at the end of January after the stock’s long and painful 92% downslide over the past year.

This candlestick typically heralds a turnaround in a stock trend, but only if it’s underpinned by strong trading volume (and with relative volume at 1.01x, it is). As always, be sure to watch for confirmation in the form of higher prices ahead.

Casa Systems, Inc. (CASA)

Casa Systems, Inc. (CASA) appears interesting at the moment on the back of its low RSI of 29.87, which indicates that the stock is oversold, as well as a bullish but slightly imperfect white marubozu candlestick that appeared on its chart on the last day of January, hot off the heels of a hammer candlestick.

It is important to note that the latter signal doesn’t have quite as strong trading volume behind it as would be ideal (0.41x relative volume) and has a very small upper wick, so traders should be somewhat cautious with this one. Nonetheless, some other positive oscillator data out of TradingView.com (such as stochastic %K [14,3,3] at 11.14 and momentum [10] at -0.91) point to Buy, lending more validity to the investment thesis here.

Maverix Metals Inc. (MMX)

Maverix Metals Inc. (MMX) ended January with a spinning top candlestick, which signals investor indecision, followed by an inverted hammer candlestick. Coming after a 16% loss in the past quarter, the inverted hammer could indicate that Maverix Metals will be seeing a trend reversal soon back to its earlier $5 territory—and that’s good news for investors.

Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it’s your responsibility to make trading decisions through your own skilled analysis and risk management.

Peter Leeds is the author of several books, including the international bestseller, Penny Stocks for Dummies. He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel, PeterLeedsPennyStock.

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