Hi Chartay,It hasn't been a very happy time of late for the...

Hi Chartay,

It hasn't been a very happy time of late for the share price, but in a nutshell, I think the worst of it is over. The remainder of this post will explain why.

I have included three clickable charts below to explain my thinking, just to keep it simple. This avoids posting one chart that is so busy with detail that it is more confusing than helpful.

- - - - - SITUATION AS AT 12:10 ON 7 DECEMBER 2010 - - - -

CHART 1 - THE CURRENT PITCHFORK



This chart shows the Median Line, the Upper Median Line Parallel and the Lower Median Line Parallel with two internal lines in lighter blues; the 0.236 and 0.618 Fibonacci divisions. Remember that in Pitchfork theory, price always tries to return to the Median Line. For the moment, the 0.618 line appears to be marking a level of support and this includes today's price action up to the time of posting.

If this support line holds, and I expect it will, then I would expect price to continue working its way back up to the Median Line, as an intermediate target, with perhaps some mild effort required to overcome the resistance that the 0.236 line will represent on the way.

It is normal for price to test then retest each of these significant lines as support or resistance (depending on which direction it approaches the line). As an example, I have marked the test/retest scenario for price on reaching the 0.618 line on 24 Nov, as I read it. I would expect the 0.236 line to offer little resistance when eventually encountered, give the new momentum price should have by that stage.

CHART 2 - DOWNWARD TREND COMPLETED?



This chart shows the downward trend we have experienced since the high of 40 cents and the temporary breakout price made on 3 December and 6 December before succumbing to selling pressure and returning to close within the trend's limits. Note that price action today is wholly outside the limits of that trend so far, and a close at 22.5 cents or above would confirm it. I believe that such a close, in combination with my belief in the support level that the 0.618 line indicates, marks the end of that downward trend.

CHART 3 - UPWARD TREND STARTING?



If you accept the conclusion in Chart 2, then the obvious question is "What is the new trend?" This chart shows what I believe will prove to be the new trend, that has already started, and this should become more evident over the next few trading days as price movement has a chance to confirm it. Note that this apparent new trend is consistent with what the earlier pitchfork has indicated (i.e. a return to the Median Line).

In the absence of any astounding announcements, I would expect price to reach the Median Line, at a level of 35.5 or 36 cents, by the end of January but not earlier. Normal buying and selling pressure should achieve this, but I would not expect to see these levels before that time and I think it will be a gradual climb with some falls along the way, including some intra-day swings of 3.5 to 4 cents between high and low for the day.

I do not think the gap up from 13 cents on 18 Oct to 16.5 cents on 19 Oct will be closed.

P.S. In deriving the above overview, I have switched from my normal practice of reading chicken entrails (at the request of the RSCPA) to a combination of reading tea leaves and recording wind chimes. I trust the new methods will prove at least equally reliable.

Hope you find this useful, to some extent.

Regards,
Bones