chart of the day

Catherine has a very bullish technical view on Molopo.

The oil and gas explorer Molopo Energy has been basing since August with the potential to move quickly higher.

Total retracement
Molopo Energy is one of the few stocks that traded a very contrary path to the normal action during the GFC. While the broader market was in near-crash mode Molopo Energy had its best rally from the beginning of 2008 to the middle – going from 40c to over $2. Unfortunately it gave back all those gains, revisiting a low of 41c in October that year. Another rally in 2009 took it to a peak of 1.70, but once again the gains were mostly retraced, hitting a low of 52.5c in August last year. What we know about Molopo Energy (seen in the monhtly chart below)  is that it can have some spectacular runs higher but those gains can be nearly totally retraced in any downturn.

Healthy downside rejection
The monthly chart below shows a long-term basing pattern building for Molopo Energy from the early part of last decade. That pattern took years to form – and when it was confirmed with a close above its peak of 47.5c – he gains became rapid. Recent price action looks similar. From August last year the low of 41c has given way to some healthy sideways action which is not quite a double bottom pattern but shows rejection of the downside a higher levels.

Parallel line signal
Another bullish aspect of this chart can be seen when you draw parallel lines (drawn on the daily chart below): first from the 2009 peak and then from the highest rebound peak made in February 2011. The second line was breached in October last year and all further price action has been above it with the line clearly acting as support in December. The outlook remains bullish unless Molopo Energy closes below its 2011 lows of 52.5c after which there is support at the lows of 2007 at 41c. There is also support at the lows of January 10 at 57c.  A close above the 2011 peak of 74.5c on a second wave of gains would be bullish. Next resistance is at the highs of July last year at 81.5c followed by the Fibonacci 38% retracement of the losses since late 2009 (1.70 – 52.5c)  at 98c.

Sup:  0.57  0.525  0.41
Res:  0.745  0.815  0.98

http://www.thesquirrelist.com/chart-of-the-day/molopo-energy-analysis/