I thought it might be time to revisit the chart. This is a complex post and I am by no means sure of the path at this moment, so I will look at broadly where we would be if the pre-announcement model still held and where AI think we might be with the "new post announcement world". I apologise in advance to the expert chartists among us because to make the post accessible to beginners or the just idly curious I am going to teach people how to "suck eggs" a bit so that the logic is approachable, and to highlight where I might be missing something important.
Firstly,
@acwbagnall, I know 4DS isn't your usual space, but if you have time, mate, I'd appreciate your charting genius to cast an eye over this and see what you reckon. I'll establish a couple of commonly understood ground rules about what has happened/ is happening:
- With the announcement of the Megabit memory array's outstanding success on the 23rd we went from very high risk of total wipe out to massive success and de-risking, so from a TA perspective the entire FA base for pricing changed, including timelines and price ranges.
- Given the expected end point at this point is a trade sale of the business/ company, rather than ongoing commercialisation, at some point the SP will start trending to the expected sale price, which for want of a better number is assumed to be somewhere circa 60c (based purely on historic guessing from a year or so, and could be higher, and less likely lower)
- Before the failure of the expected final fabs last year before which the company switched into sale mode, changing execs and completing dev contracts - all of which had to be re-established after the unexpected failure of the fabs, the SP climbed to circa 28c. Had the fabs come back and worked as they have today, it might be reasonable to assume the SP might have gone to 40 or 50c, being a reasonably risk sensitive price assuming that a buyer might not have materialised for whatever reason at the expected price.
Thus, at this point we are well below the position of last year, although 4DS now has a working megabit array with better than expected performance. From a risk perspective we are awaiting more details of the testing - so additional announcements are expected in the near future (but there is no guarantee of that) and we know that in Oct IMEC and 4DS will meet to plan strategy going forward. There has been no comment on switching back into company sale mode, and the development exec / team, rather than a company sales team remain in place. At this point we have zero knowledge of what the next step is planned to be, only what it has historically been planned to be when 4DS reaches this point. This creates a sense of "unknowns" which share markets generally don't like, so there is plenty of risk still present. A sales strategy decision should see the SP trend up, but a decision to pursue ongoing R&D with no sales strategy might see it trend down (particularly as it will imply a CR), even if it is likely to improve the final sale price. Where the market see's this as going will have a significant impact on SP.
The next thing I am expecting to see is some sought of extra detail about performance from the testing, which if positive (as expected) will push the price up a little, but the timing on that is anyone's guess.
So that is the FA situation. Now lets look at the TA.
Firstly we will start with the intra-day from Friday, being the immediate term projection:
This is a 1 minute chart since the 23rd when the announcement was made. Assuming that 10.5 is the lower bound of the retrace (you can see I was forecasting 11.3) I get a projection target of 18.71 from the current price of 13.50. If this is going to happen it should come Monday (BUT note comments later on) Otherwise everything on this chart looks supporting to me. The MACD is rising, the 26/9 trend lines have crossed with the 9 (blue) pointing up above the red, the 9/21 EMA on the main chart is has crossed up (the blue cross on the main chart), and the SP candle has on that chart has turned up at the top of the ichimoku cloud (the green shaded area, and we have a higher high and a higher low in the wave shape. The RSI is sitting in the middle of the band, rising from oversold, and has plenty of room before it goes into the upper overbought zone.
The SP broke out of a declining wedge (the green lines) and reached its target of 13.50 projected by that break and then formed a flag (marked in purple) with a 3c flag pole (and a target projection of circa 16c).
Lastly the daily candle pattern is a bullish engulfing from Friday indicating a probable rise in SP in the immediate term:
So the immediate expectation is a rise in SP on Monday.
Now lets look at the daily. This is how I was modelling it prior to the announcement, adjusted for the movement of the SP over the last few days:
At the time of the announcement I had us on wave 5 (Elliott Wave theory), but I was unhappy about Wave 4 as I stated at the time because it was barely a 23% retrace on wave 3. I am happier when it gives a 38% retrace, although 23% is possible. If that is still correct we would be completing wave 5 now, and either coming in for a double top or starting the B wave of a correction wave (as marked) BUT the timeline has sped up dramatically if this is the case, from days for a wave to hours. I will assume that we are starting the correction wave pattern (marked A-B-C). If it goes higher than 16 we could still be in a wave 5 and possibly forming an ending diagonal, but obviously not in the correction pattern. The latter would be more consistent with time lines to date, but as we have no data on which to base this possibility I will assume the correction pattern holds for this discussion.
Under that scenario the A wave has retraced to 50% of wave 5 (see the fib rainbow marked ), and the B wave has climbed back to just above the 23% fib with a possibility of going to 14.5 on Monday before resuming its retrace down to C, approximately the 78% fib of wave 5, and making C the same height as A (the basic way we model these things once we have an A and B wave. That gives a B wave target circa 14.5 and a C wave target of between 7.3 and 8c
The fib rainbows marked & [iii] show the same thing, but the latter is easier to read. They are a trend projection based off the current A and B wave positions (not the projected B wave height), and project a C wave target of 5.7c, but I think this is a little low if unless there is total radio silence for a month, or discouraging news. (The projections are read from the 161.8% fib line). Resetting the projection to the projected B wave height moves the target to 6.2c
[iv] marks the 7 day EMA. Anytime the closing SP is more than 10% above that there is a strong push for the two to close on each other and as [v] shows we are currently 43% above that as of Friday close, but if the SP doesn't move from Friday's close the 7 day EMA will naturally close the gap over the next few days anyway.
So based on this model, we should be coming down, possibly after rising a little early Monday BUT we may not have started the correction yet and it is unusual to simply peak once on a wave 5 and fall, as generally you get at least a double top, so we could easily be in the process of forming an ending diagonal which would see a higher high yet, AND something just feels wrong about this model to me, partly because the timelines have sped up so much and because I still worry about that wave 4. If the SP hits 14.5 and then retraces heavily on Monday, then the odds of it being right go up I think.
Now lets consider a dramatically different interpretation:
Here I have reset the wave count so that the recent high was in fact the top of wave 3. In some senses this works better as the retrace of the last couple of days takes us to the 38% fib almost exactly - 10.9c vs 10.5 (see [ii]) Wave 3 exceeded the target by just topping the 261.8% fib of wave 1 (see ) which makes sense given the FA change induced from the announcement. BUT it implies a wave 5 top between 15.03c and 32c marked by the rectangle at [iv] and calculated as follows:
15.03 = the height of wave 1 added to the base of wave 4 (the expected minimum) [v]
19.6 = the 161.8% fib projection from the height of wave 4 (the second approach) [iii]
25.26 = the 261.8% fib projected from the height of wave 4 (third approach and the mid point in the projections AND the one I am instinctively leaning towards) [iii]
32 = the 161.8% fib projected from the trend pattern of wave 3 and 4 [v]]
The A-B-C corrections following are total guesses, although shaped approximately correctly. Only in the lowest wave 5 target is the support channel (marked [vi]) likely to come into it, I think. Support channels are created by running a parallel channel enclosing the start and end points of waves 1 & 2 and the top of wave 1, then extending that channel past wave 5. The A wave should strike somewhere in the top half and the C wave somewhere in the bottom half. That seems a little extreme to me here except in the worst case scenario of wave 5, but by then something has probably gone wrong.
Note the MACD supports an expectation of continued rise as does the ichimoku cloud, 9/21 EMA (crossed back in July), but all these indicators are a bit slow at the daily cycle and will only show a problem when the price has already come back a bit. The RSI is uncomfortably high (well into overbought), and suggesting a retrace is due, implying care is indicated, and fits with the too-low wave 5. I'd say 19.6 and 25.26 are strong targets in the short term.
As a last point note that wave 3 is well outside the bolli bands, which is usually an indicator for a wave 5 confirmation, not a wave 3 confirmation.
So my guesses for the near term targets using this approach are the red prices on the right hand side. Timing is rubbish, as I have not attempted to map the timelines so ignore the dates after Monday next.
Obviously all of the above is educated guess work, probably wrong, and for consideration and entertainment only. It is purely my opinion, and should not be relied upon for anything.
