Hi
@Eklavya,
There was some modest initial support drawn out just prior to the 7th Feb.
And prior to that was a long period of sideways trading which saw some moderate buying or accumulation taking place, that was being a little overwhelmed by ongoing supply, which caused price to slowly drift lower over time.
I expect there was negative (or neutral at best) news available in the market during this time.
It appears CAT has then saw some pretty decent buying support emerge on the high volume down bar (7th Feb announcement).
This down bar acted like a shakeout in the market, where any holders that were inclined to sell in the short term, did so.
So it appears that announcement you mentioned, was used as the catalyst for price to be forced lower, quite possibly deliberately (to some extent), most likely to flush out the sellers for some accumulation.
If so, this is a good thing for a swing trade over a reasonable period of time. As there is likely to be someone (or some group) in charge, driving price higher when the opportunity allows, and defending price against modest supply when it is drawn out (up to a point).
Following that, there was a little test for supply.......and there was very little supply drawn out (so the sellers had been absorbed on the 7th Feb, and selling pressure was now much lighter - eg- so not many sellers now left at this level).
Then price effectively broke out above the high of the 7th Feb down bar (arrowed) - and accelerated higher on an increase in volume, which is just what you want to see (a deliberate breakout action like that), and helps to confirm the story that appears to be unfolding on the chart.
Price then moved up to the next level where resistance was likely to re-appear (around the 1.25 level), with relative ease.
The resistance at that level (increased selling pressure), was likely to be from stale holders in the older congestion to the left.
From the trading action on the chart, it appears that not a huge amount of resistance was drawn out (which is again a good thing), and what supply
was drawn out, was easily absorbed over just two bars (one up, then one down).
That brings us to this week (which is incomplete until today's session finishes), and so far shows price pushing higher on reduced volume.
This suggests that price is 'marking up' quite easily, on the back of 'a lack of selling pressure'.
The next level where some resistance maybe felt is between ~1.50 and ~1.75.
There was not much increased supply drawn out from the previous level (around 1.25), so I don't expect it will be too overwhelming here either (famous last words....).....we'll see......
So for me, this stock looks promising. It has strength (obvious buying) in the background (which is just what I like to see for a swing trade), and what appears to be a deliberate mark up currently taking place.
I expect good news stories to now be available in the market during this period.
The ideal timing for a position was soon after the initial breakout. However as a swing trade, a 'buy the dips' trading mentality should continue for some time (so long as the ASX and world markets generally, remain relatively positive - which I expect they will).
If you do buy this market, it shows some hallmarks of professional speculative buyers being active (I don't know if this is correct or not, it is just my feeling, which I get from the trading action - it looks more deliberate and engineered, than just a random composite of the general market).
Anyway - if so, this is both good and bad (depending on your position).
It is good because the professionals will actively attempt to offer support and defend against supply where possible, while pushing price higher when the opportunity allows.
-----------------------
Just to be clear - if overwhelming supply is drawn out (for whatever reason), I expect there will not be much active support at all (they might just dump stock as well - depending on the reason for the serious change in sentiment), but when only modest or expected supply is drawn out, at logical levels, it will likely be absorbed to protect their positions.
And when the opportunity allows, and supply is light, their ongoing modest buying support will keep price drifting higher, and encourage outside buyers to join in and help the 'mark up' phase to continue with little extra effort.
-----------------------
Finally, professional involvement can be viewed as bad by some, because they
'will' sell at some point in time - they are unlikely to be longer term holders. If all goes to plan perfectly, they will begin selling on a widespread upbar on a really good news announcement.
So if you hold a trading position, and you see them start to sell, you should consider doing so as well (not necessarily immediately, because it will likely take a little time to complete (unless they are dumping), so wait for some confirmation and then look for a high price sell if possible), or at least lighten your load a little - especially if the position was bought as a
trade, and not as a longer term hold.
I marked the
weekly chart below with the points of interest.
View attachment 1560205hopefully that is helpful to you
cheers
(20min delay)