Last week at the Absolute Traders CAF session, Chairman Fitz Aclan also noticed the inverted H&S forming in the index. With the first 2 trading days down movement of the market I was already thinking if this is the start of the right shoulder’s formation. In my analysis from the gaps formed, I was expecting that the right shoulder should start its formation when it reaches near 3460 level. It is only now when I saw the index’s chart that I came to verify that the recent activity in the market was just a sideways movement. So this definitely is not yet the right shoulder’s start of formation. This is now the critical part of the movement, the recent week’s sideways movement can mean any thing. If traders are still bullish on the market, the sideways movement is just a healthy pause for a further upward move. If traders have started to get bearish once again, the sideways move may be an exhaustion of the buying activity and we may see the index move down. Things to watch out for this week is the 130 day MA acting as resistance at 3380 and the gap formed between 3210 and 3260. A move above the resistance line means there is a good chance for price to move up to the 35 day MA at 3500 for now. A move to close the gap means were in for another bearish ride
Mining Index (Chart: Daily Resistance: 6270 Support: 6030/5900)
The mining index caught my attention because of the gap, the great spread and high volume last Friday. This led me to look thoroughly at this index as to what area pattern it broke out from. But, as I tried to turn the image upside down, flip it left to right, I was not able to see any area pattern from where it broke out. But on further analysis of the gaps formed, rather than being a bullish indicator, the gap with big spread and high volume was rather a bearish warning. Index has already formed a break away gap, runaway gap and now, the recent gap formed was the exhaustion gap. Considering the runaway gap as a halfway point to the top, coupled with the exhaustion gap, this means the current index level is already near the top. The current index level is also being blocked by the 35 day MA. Things to look out for this week are the resistance level of 6270 which is also the 35 day MA, support level at 6030 which is the 130 day MA and the RSI reaching the oversold level. The gap, big spread and high volume may still attract buyers, and possibly contribute to a short upward move before moving sideways
GEO (Chart: Daily Resistance: 2.00/2.04 Support: 1.64/1.52)
GEO seems to have formed a small ascending triangle and broke above resistance at 1.64. The target price for the small triangle is 2.20. Along its way up it may encounter resistance at 2.0 the psychological resistance and 2.04 the 10day Simple Moving Average. Best price to get in on this stock is below 1.76. Cutloss is at 1.62. Recommended selling price is at 2.18. The breakout volume is good; however this may still be affected by general market sentiment and also in particular the mining index, so keep watch of the movement this week.
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