Well that was an exciting week but I guess we had to have a pause at some stage and the way the sp had been rising the angle was almost becoming vertical.
The lack of an update Friday was probably a good thing and will allow the traders to re set and start again. One would expect that the buying from China or wherever it’s coming from will resume again very soon.
I will try & ignore the FA and just look at the charts but that is really hard atm as the charts are telling me the same old boring story all over again but my head is telling me to ignore it because something else is going down.
So I will just do my chart thingy as usual and ignore try to ignore my head.
There are a few negatives on the charts atm which may be indicating that we will have the usual retracement scenario. This will of course change at the drop of a hat if we get the update pre open Monday.
The daily indictors, (quick stoch’s) have now turned down but remain in the overbought area.
The volume on Frid was relatively high & I would normally associate that with selling / profit taking, particularly after seeing that big down bar.
The close was in the lower half of the days range and my first line of support is at $0.19 if $0.20 fails to hold.
Despite these short term negatives, I see the charts (all time frames) as being very bullish atm and so I am not expecting to see the usual 62% retracement, that should be an expectation though if the update does not eventuate and after applying the fib tool to virtually every rally & retracement for the last 18 months it is never a surprise to me when we have a 62% pull back after the sort of move we have just had regardless of fundamentals.
But.
There have been times in the past when the sp was going through a re-rating process brought about by the fundamentals and when the sp did pull back from its highs it only had a small retracement.
I think (hope) this may be one of those occasions.
The sp retreated from its high on Frid and closed just above the 23% line. The day’s vol was lower than the prev day and it appears that support came in and rallied off the low. It doesn't look like any serious attempt to sell down was happening.
The MACD is very wide away from its signal line (usually indicating a slowing or small pullback of the trend as it comes back to the indicator) but the trend is very much intact and rising.
Given the expectations for the coming week and the possibility of more updates regarding DD, progress of the pond construction, pumping brine etc. any pull back should be short and sharp if at all ( & has possibly already happened as per Fridays pullback)
The weekly.
The only negative I see for the short term is that there is a divergence showing. That is a bit worrying as these are normally very good predictors of change.
The weeks candle has closed above a trend line I never thought to see it crossing let alone closing above it. This is a long term trend with the angle over 42 deg.
That in itself is not a negative and I think is more a reflection of the strength of the fundamentals and the future expectations of the company. The sp is overbought though if measured by the normal indicators such as the Bollinger bands.
Other than that, I can’t see too much wrong with the weekly at all really but given the daily indicators are showing a potential reversal or slowing of the momentum I guess we can afford to have a pause and retest the mid point of the new range box ($0.18 – 0.19).
Although from a historical perspective we can’t discount a retest of the low down at $0.165 but I really cant see that happening and expect to see another new weekly high coming up. I am going to go with a $0.27 high next week.
The monthly at mid month is very bullish after building two very big green candles. The monthly target I see is about $0.31
