Continued Rare Earth Producers Technical Analysis – One Potash Junior

I’ve had a lot going on over the past week and I’m gonna have to keep this one quick as I have another article to work on tonight however I wanted to continue on with the updates on these rare earth producers given the wild swings that have taken place since my first article last week.

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MCP was pushed high during the last two trading sessions, yesterday ending in a doji, and today ending in an engulfing candle. There’s a lot of calls on the $50 strike which expires tomorrow and though it has made a run at $50 during the past two sessions, it hasn’t been able to stay in that upper range and I don’t see this as a buy just yet.

The wedge that I drew on this chart last Thursday played out in textbook fashion with more than convincing volume. If you had the cash to buy this when I suggested it, then you are already up 33%. Unfortunately for myself, my bid of .77 never executed when I had it open on Tuesday! I don’t chase charts higher and expect a Great Western/Stans Energy type pullback after this big move. I’ll be a buyer again when this thing comes back down.

The last two weeks of trading almost looks like a bear pennant but the trading appears to have flattened out as the volume is weakening and there has been multiple tests of $2.25 support. I went long at $2.34 which is a favorable discount from $3, if this thing breaks down, it’s got $1.75 and $1.50 as support but I don’t suspect that to happen.

This thing just looks so oversold to me… support may have been readjusted below .90 because I don’t see how support could have truly broken given the circumstances. Today’s doji candle could be the beginning of a reversal in the trend, momentum has slowed down on the stochastics as well. I’m definitely a buyer here.

I didn’t do AVL last week but I figured due to the recent activity, I think they’re worth including. AVL continues to break different resistance levels as it is coming out of a cup and handle formation. I think it will move higher, probably have an RSI peak soon and eventually retrace a little bit as it is fairly overextended from that support trendline.

Again due to recent activity I also want to include this Potash junior Allana Resources (ALLRF). Big moves here over the last two months but it looks like a bear pennant is forming here from the last six days of trading and I want to either wait for this to break down, or wait for the market to present a buy signal before entering any position.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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