Talga Chart

A promising change in Talga's chart.

Early days but we have seen higher lows and a strong move up in the share price over the past two trading days. What I see is the beginnings of an ascending triangle, usually seen as a continuation pattern in an established trend however it also signals breakout when the share price has bottomed out. At this stage it is around half complete as desirably we want to see three points of contact on each of the boundaries. The rising share price tells us that buyers are currently in control. If the share price can crack 51.5 then a move higher can be expected.

Less convincing is an inverted head and shoulders pattern (lop-sided) that began mid-last year, nonetheless if that is what it is then even more upside is to come.

From a charting perspective the moving averages do not yet say it is a buy, traders will be looking for the 25 day MMA (white line) to cross above the 100 day MMA (orange) before getting on board and when the 100 day MMA crosses above the 200 day MMA (blue) then the stock becomes a long term buy.

A significant jump shift in the share price would not surprise me at all if Talga seals a deal to supply battery anodes to one or more of the Northvolt car manufacturers e.g. Jaguar Land Rover, Volkswagen, BMW etc and Talga is well placed to do that given the anodes high performance and green credentials.

If that were to occur the likelihood of further deals increases.

The target for the ascending triangle is low 60s and $1.10 plus for the H&S pattern.

If Talga's first deal is worth a recurring $50m a year then I would expect to see the share price closer to $3. Disrupter stocks attract high valuations take a look at A2M, BUBS, XRO, APT and so on all with a market cap of better than ten times annual revenues, fifteen is about average.

Mark must get a deal across the line soon if we are to be part of the Northvolt supply chain for EVs coming off the production line in 2021, a second deal of similar value in say concrete or coatings could see the share price above $5 using the same disrupter metric.

Longer term the sky really is the limit.