Simple (potential) Support and Resistance Chart.Sadly that is...

Simple (potential) Support and Resistance Chart.

Sadly that is all that is simple about it.

As I see it, the major resistance zone to form a 'breakout' was between 1.08 - 1.135, which was cleared on the 6th Nov, and was 'tested' twice following that (see chart).

Most charts would see some 'clear air' immediately above the breakout zone which allows the shareprice to run up easily to the next zone (and gets market participants excited).

However Atlas left quite a bit of supply on the chart almost right on top of the breakout zone which is thwarting any easy run higher.

This has left the Atlas chart with a quite complex situation to deal with.

The supply coming in, is most likely made up of a combination of-
- old longs who bought prior to late March 2013 & have held (at a loss) since then.
These holders now get a chance to 'get out' at breakeven, should they choose, as the shareprice reaches them.
- new shorts taking positions at these levels (for whatever strategy they have in mind),
- profit taking by new'ish longs who have bought at the lows or during the run up to this point.

It most likely this supply that continues to be seen, which thwarts an easy rise in price after breaking out.

The breakout zone should now act as the current support (baring any unforeseen event), which is between 1.08 - 1.135.

For the shareprice to rise all this supply needs to be absorbed by new buying,
and when the shareprice does rise to new higher levels, it again finds new supply from another group of old longs that are now able to 'get out' at breakeven, after holding at a loss for quite some time.

It would appear that until the shareprice can clear and test 1.395 (apart from a very small zone between 1.27-1.29) it wont find any potential 'clear air' to move through.
So a process of chewing through this supply is likely to continue in a grinding action,
making minor new highs, then coming off until supply dries up......and so on, grinding through the supply coming in.

Just how long this will take is anyone's guess, and depends on current demand (and exactly how much supply keeps coming in at each new level reached).

cheers

Red zones are potentially quite strong resistance zones, yellow zones are more normal resistance zones, blue and purple show the old breakout zone which should now act as current support.