For those who attach some credibility to the black arts of reading chicken entrails and some forms of charting, here's my take on why the BRM share price is moving the way it is and where I think it is going. The following comments apply to the clickable chart at the end of this post.
The chart contains a dark green pitchfork with two ligher green lines marking the 50% divisions within its upper and lower channels and an external light green 150% line. The central dark green line is the Median Line which indicates the path to which price will continue trying to return. The upper Median Line parallel (marked as U-MLH) and the lower Median Line parallel (L-MLH) mark the limits of the expected movement away from the Median Line under normal circumstances. Where price movement exceeds these limits it ususally is arrested by one of the logical, outwards extension of this pitchfork's lines, e.g. the 150% line.
Note the price bars within the red rectangle I have drawn. This is the area of immediate interest.
Pitchfork Theory states that price always tends to return to the Median Line. It also states that there is an high probability that each time price crosses one of the significant lines (in either direction) it will back-test that line as either resistance or support (depending on which direction price is moving), before moving on to continue the current trend. Note that in the red rectangle, the first three price bars show an upwards move to touch the lower Median Line parallel (L-MLH) from below at my Point 1. That line acted as resistance and the price high of the day was not able to penetrate above it. The following day price again tried to penetrate this level of resistance and again failed. Consistent with the 'knock three times' theory, price again tested that resistance on the third day and broke through to close well above the L-MLH line. On the following two days price has paused (some profit taking here).
Thursday's movement (at my Point 2) reversed direction to back-test the L-MLH line, to establish whether that former resistance level could now be regarded as support. Price initially sank to $3.25, the low of that day, when buying pressure kicked in to lift the price back up to a close above and well clear of the L-MLH line. On Friday, price again retested this line as support and after another successful retest, climbed away strongly to close on its high of $3.48. It was always necessary for price to back-test this line and the fact it has done so successfully, twice, is a good thing after the recent rises. It was also predictable, within an 80% probability, that price would perform this back-testing process.
Price should now continue to climb upwards towards the Median Line shown on the chart, with some minor retracements on the way perhaps, but overall with good strength. I'm betting on a few very positive weeks ahead. Note that the chart does not make any allowance for the impending release of the DFS, which should only serve to increase the strength with which the share price climbs. I have drawn a purple, vertical line at 30 September to indicate when the DFS should be out.
Of course nothing in life is certain and I may have picked the wrong chicken for this reading, however I'm happy with this outlook.
Regards, Bones
BRM Price at posting:
$3.55 Sentiment: Hold Disclosure: Held
