AGI is potentially forming a bottom on a weekly/monthly time frame. Next week will provide more information. A break above the long term downtrend line (down sloping red line on chart below) could make it more probable that a bottom has been found (but no guarantees)?
Evidence supporting hypothesis:
1. Long term price pattern is a falling wedge - slope of line connecting major swing point lows (green) is shallower than line connecting major swing point highs (red). A break above the upper line of this pattern is traditionally regarded as bullish. Currently price is "knocking on the door" of the upper line. If it breaks through next week and closes above it then there is a strong chance that a bottom has been formed (again no guarantees only probabilities).
2. Very high volume came in on the 26/10/2017 to form a swing point low of $1.60. This indicates that price reached a value that attracted a lot of buyers. The high volume probably exhausted the sellers (weak hands finally "throwing in the towel" or "shorters" taking profits). This day was also a "false" break of the prior major swing point low (15/02/2016 $1.765). After the false break a 9 week rally ensued taking price up to $2.15 (false breaks often lead to fast moves in the other direction). Since the rally any attempt to go back down and retest the $1.60 level (24/02/2017 & 15/05/2017) has been unable to reach it indicating that buyers are keen to pick up stock at bargain prices.
3. Last week was a "bullish engulfing" bar where the low of the week fell below the low of the previous week and the close broke above the highs of the past 15 weeks further indicating that the market is currently "bullish" on this stock. This bullishness has occurred amidst a background of general market bearishness which is even more compelling.
4. Consensus valuations and price targets "gleened" from a variety of sources on the internet including my broker indicate that a price of $1.60
may represent a significant undervaluation. The market sentiment represented on price charts seems to support that view.
What am I doing?
Generally I am not a value investor or a bottom picker. I don't buy low and sell high, I buy high and sell higher. I won't start to getting interested until price breaks above $2.15 which is the lowest swing point high on the monthly bar chart. I have put AGI on my watchlist & will monitor future price action and any business updates.
Weekly Bar Chart
View attachment 584601
