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Golden Agriculture: Alarm bells aplenty?

Saturday, April 2, 2011

I missed the last leg up on Golden Agriculture as its share price formed a higher low on 15 March at 62.5c. The counter touched a high of 71.5c in the last session before closing at 70.5c.


The MACD has been rising and is now in positive territory heralding the return of positive momentum. However, the question to ask is whether this is durable. Notice that OBV is not higher than it was on 4 March when share price touched a high of 72c. This shows distribution going on as price retests highs. The MFI and RSI are both bordering overbought regions. The suggestion is that upside could be limited. If alarm bells are going off in your head, you are not alone.

If you believe like I do that the counter's share price has not spotted a strong trend in a while, we have to look at the Stochastics which is currently in overbought territory. So, a pull back is more likely than not to happen in the near future. More alarm bells? I think so.

Connecting the lows of 23 Feb and 15 Mar gives us a trendline support. For anyone considering a long position in this counter, a retest of this support could be a much better option. So, is there no possibility of a breakout which could see price going higher? The possibility of a breakout exists, of course. Like I said before, TA is about probability, not certainty.

Related post:
Golden Agriculture: Testing the 200dMA.

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