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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
The name of the game since the peak earlier this month has been to try and pick out the level where the post March rally might resume. At least initially the logical place for a bounce to come in would have been the May support before the 2013 was made at 0.85p.
However, what we have actually seen is support come in between former March resistance at 0.75p and the 200 day moving average now at 0.6p. In fact, it would appear that there is a decent chance of the floor of a rising trend channel drawn on the daily chart from February finally acting as a new base here.
Nevertheless, given the antics of recent weeks it may be wise to allow down to the 200 day line at 0.6p as the ultimate stop loss on long positions, especially given how volatile this situation is. An alternative to trying to catch what appears to be a falling knife would be to wait on positive momentum to come in.
This would take the form of waiting on an end of day close back above the 0.85p broken support – an area which also ties in with where the 50 day moving average is currently. Either way, it would appear that if the consolidation is complete, the top of a February rising trend channel at 1.30p could be back on the agenda – especially if we clear 0.85p over the next week.
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