I think that TA (at least for me) is all about pattern matching and there isn't a pattern for what happened this week. No TA could predict that EM was going to decide to throw a curve ball at Li resources. It was reasonable to assume it was going to be either a non-event or positive for Li demand in some way. The probability of him wanting to blow up the Li sector wasn't on the cards so it was not being reflected in the trading behaviour leading up to the presentation and thus not in the TA EXCEPT that (if you look at my earlier chart) you will seen it collapsed out of the blue climbing wedge, but got caught nicely in the dotted pink line climbing wedge, which it then fell out of after the presentation BUT you would reasonably expect this much of a reversal - maybe 130, maybe even 125.
His curve ball still doesn't make a lot of tactical sense because regardless of whether you believe his clay fantasy, he still needs Li for the next few years, which means he needs mines flooding the market with Li if he wants it cheap over the next few years. He was more likely to achieve that with buoyant share prices driving investment in more Li producers than crushing the SP and therefore CapX on which those mines depend. It is not like there is a shortage right now - but there will be soon if LI miners can't get investment to expand. As this was thus a black swan event it was not factored into the trading patterns and therefore not reflected in TA.
We are still in the immediate aftermath of the day, and there has been a massive over reaction so TA analysts are still searching for the new pattern to emerge. For me it has blown through about 4 alternative patterns and now there are two left: one goes up one goes down from here. Today I've bet on the "goes up" pattern, after I had bet on the goes down pattern and then reversed all my trades. Would I assign a probability to the outcome? Hmm. Well until the last bit of the day I was pretty certain it would drift down next week by another 10c, but the recovery action after 111 gave me pause so I re-bought. If it goes up I am a freakin' genius TA star, if it goes down I am a freakin' idiot. Would I rush out a chart? Nah, not yet as there is a good degree of gut instinct in my decision, and I am fundamentally assuming the uptrend is still in place. This stock is a trading God send but it can make you a fortune in a week, or cost you one - particularly when it is in these states of flux. I have made and lost huge amounts on this stock over the years, and some how I just can't stay away from it. Most of the time the TA works well on it, but everynow and then it has these crazy events that undo a ton of your previous success in a few days. Either way, it will probably all be peachy by Jan 5, like it is every year. Assuming the world does not slip into a vortex of hell after Nov 3.
