technicals

There seems to be a few worriers coming out of the woodwork.. I am not sure why, price has not fallen that far relative to where it was recently. I quite like the current price action, AUT looks strong to me.

Below is my technical view of AUT. I do not day-trade AUT and as such am not concerned with the day-to-day movements. It is the bigger patterns that I watch, this is my medium term view.


First up, the fib retracement.




Stocks don't go up in a straight line and retracements are common, in fact they are healthy. I am looking for a bottom in the 50%-61% fib retracement zone to indicate strength of the most recent move and a likely retest of the highs at 3.55.

The candle that I have highlighted is a nice rejection candle. Price was sold down to the 50% level, but buyers came in on the same day and the candle closed well above the low. This low has held as support for a week now, and I will look for it to continue to hold.

If it doesnt, it does not mean the uptrend is over. I would then watch for any further price action in the 50%-61% retracement zone.

Any break below the 61% fib level at 2.66 would indicate that the lows at 2.11 will be retested.

Next up, the moving averages




I will say here that I don't enter trades off of moving averages, but because a lot of traders do they are worth looking at.

The first green arrow shows where price initially supported on the 195EMA. Price rose and met resistance at the 41EMA and was sold down.

You will see that although price broke below the 195EMA level at this time, when it came time for the 41EMA to cross below the 195EMA, price rallied. This price rally meant that the averages did not cross meaningfully, and the uptrend continued.

Currently, price is again supporting on the 195EMA. I am watching to see if price can bounce from here and get back above the 41EMA. If it does, I expect the highs to be retested and the uptrend to continue.

If price breaks below the 195EMA, I will watch for the 41EMA to cross below the 195EMA. If this happens, the uptrend will be in trouble.

The 41EMA has been above the 195EMA since October 2009, when AUT was 0.20. If you had bought on this cross and held until now, you would have done very well. Hence, any cross and hold of the 41EMA below the 195EMA would be of major concern in the medium term.

Finally, the resistance level




Even blind freddy can see it up there at 3.55, and that is what I like about it. It is so blantantly obvious, that should price move back to its highs, every man and his dog will be shorting AUT with their stops at 3.60.

This would be the perfect scenario for price to breakout, clear out the stops, and allow the real players to accumulate some easy stock.

Contrary to conventional thinking, the more touches a level gets, the more likely it is to be broken.

Remember, resistance is made to be broken :)