Here’s a thorough analysis of TALV (Talvivaara Mining Company Ltd) which is a Mining Stock I recently suggested to watch. Overall I think the longer-term bullish confluences look strong and the bearish confluences all point towards a retracement as opposed to continuation of the bearish trend.
BULLISH CONFLUENCES
- Price broke out of and closed above channel and 40sMA
- The break above previous swing highs confirms the bullish MACD divergence
- MACD is above signal line and both are above the zero line, confirming positive momentum
- ADX now above 20 which confirms the trend
- ICHIMOKU CHART: Price above kumo (bullish signal) – if Chinkou Span closes above cloud this is the strongest Ichimoku buy signal
- RATIO LINE: The descending ratio line has now broken the resistance/trend line which shows strength of the stock against FTSE100
BEARISH CONFLUENCES
- Since the breakout of the channel volume and trading range has been thin – not sure if the market is ‘catching its breath’ for the next move higher or waiting for upcoming news
- The 20 period Price Oscillator is above a historical resistance level – this suggests price may ‘snap back’ towards its own 20 sMA
- Price is now at the top of the Bollinger Band – price tends to oscillate between the two bands which points towards a correction
- ICHIMOKU: Kumo suggest support around 232 in Feb
RESISTANCE / TARGETS
363-367 Fib Cluster
350 200 sMA
SUPPORT
250 Top of price channel
232 Kumo projects potential support around Feb
220 40 sMA
200-210 Volume profile shows lots of activity around these levels
190 Swing low
OPTION 1
- Buy above 270 (Wednesday’s highs)
- Stop beneath 250 (top of price channel)
- Target 350 to 360
* Please note this is an aggressive trade but does provide a high reward to risk – may be worth only trading ½ your usual position size so is not too painful if stopped out
OPTION 2
- Wait for a pullback before buying above 270
- The reward to risk will be lower but this may provide a longer-term trade and give the Chinkou Span time to confirm the longer-term reversal
- Only as price develops will you have an idea of the retracement levels. Areas to consider are 232, 220, 200 (or use fib retracement) and enter a buy-stop above 270 if any of these levels are respected and price go higher
