Pan Australian resources (ASX:PNA) is a growing mining exploration and development company that has assets in Laos and Thailand.
The stock has experienced a bullish trend starting in September 2006. The price at this time was $0.25. It peaked in last April when a high was posted at $1.25. It climbed by 400% in roughly 20 months. The price action has corrected between April and last week, where it retraced 61.8% of the initial rise.
It has been hammered by the current downturn on the equity markets, as well as a lot of stocks that reach their low points or support levels. However there are always performing stocks in bearish markets, and there are a lot of opportunities for technical rebounds. PNA is likely to be one of those stocks.
Why is that?
Well, typically in this bearish market, our aim is to detect the stocks that have been massively sold with the mass, but that meet criteria that argue for a near-term bullish correction.
We look for end of oversold configurations, increasing volumes, strong support levels, and bullish signals from oscillators and momentum indicators.
PNA meets those criteria.
The support level is the 61.8% retracement ratio of the 20-months bullish trend The RSI shows that the oversold configuration is over. It has triggered a bullish signal when it crossed above 30. So does the Money Flow Index (MFI) The Volume Oscillator is climbing The MACD has triggered a bullish signal on August 15 after it bottomed, turned upward and crossed above its signal line A new low price has been posted on August 13, at $0.60 (point C on the chart). One week later, it closed at $0.73. It’s almost a 22% rise. With the indicators turning bullish, there is more to come. The price objective for a further move on the upside is $0.94. A rebound to this level would be indeed a correction of half of the recent decline (between points B and C). It would also correspond to a previous low that is set at crossroads of the two support lines of the previous bullish (from points A to B) and bearish (from point B to point C) trends.
Good Investing,
Gabriel Andre
PNA Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Not Held
