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Golden Agriculture: Rebounding.

Tuesday, July 6, 2010

Golden Agriculture dipped briefly below the 200dMA before moving higher to close at resistance provided by the 50dMA at 53.5c.  This coincides with the trendline resistance which connects the high of 26 April at 62c and the lower high of 21 Jun at 55.5c.  This is the second downtrend. The first one connects the high of 26 April and the lower high of 13 May at 56.5c.  The second downtrend is gentler than the first and less dramatic.

Although trading volume increased today, it is not very heavy.  This might just be a rebound but if we believe in fan lines, price could move higher to break the trendline resistance to retest 55c as resistance.  This resistance level is quite obvious from past candlesticks and it is also where we find the flattish 100dMA. If the rebound is strong, price could even go up to 56c to retest resistance established earlier in May when the lower high of 56.5c was formed.  That, I believe, might be the extent of the current upmove.

MFI, a momentum oscillator which accounts for both price and volume has been in decline and this suggests a weakening demand. Price is probably moving up due to a lack of sellers and not because of an abundance of buyers. OBV is up which suggests that some accumulation is happening and there is some support. Downside could thus be limited.

Price of CPO is still entrenched in a downtrend and it does not look like the situation would be improving anytime soon.  The fundamentals are not strong but the share price is enjoying a bounce.  Immediate support at 52c and immediate resistance is at 53.5c.  If resistance is taken out, next resistance is a band from 55c to 56c.


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