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Golden Agriculture: Upmove sputtering.

Monday, October 18, 2010

A valiant attempt pushed price higher by just 0.5c today.  Price touched a high of 70c before closing where it started the session at 67c. That this was achieved on the back of much higher volume compared to the previous session is ominous. This suggests strong selling pressure as buyers turned sellers and locked in gains.  In fact, a case could be made to say that we are seeing the formation of a negative divergence between price and volume over the last six sessions.


However, the higher highs on the MFI and RSI suggest strong demand and buying momentum. Keep in mind that these are lagging indicators and being in overbought territories, we could see the situation corrected and the share price retreating.  In the event of a correction, the immediate support at 66c would most likely give way and a stronger support could be found at 60c. This is also where the rising 20dMA is approximating.

The 20dMA, however, has been an unreliable support in the past. More likely than not, it would give way and the 50dMA, currently at 58.5c is a stronger support.  What if this gave way? Well, the merged 100d and 200d MAs could likely hold up as it is also where the uptrend support is approximating.  This could be ideal as an entry point to go long.

Related post:
Golden Agriculture: Going higher?

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