Not the end to the week we were looking for but certainly not the end of the world.
Considering the panic selling the indicators are not as negative looking as one would expect.
The selling is once again an overreaction to what should be considered as a timely & well thought out strategy to enable the company to keep to their fast track approach while OT & stage 3 Funding is finalised.
The company needed cash and they have raised it in a way that rewards shareholders for their support & patience. Well done AGY team.
Daily
Positives
The previous low at 10.5 was tested & held, that also corresponds to the lower MLH of the long term fork.
Stoch 14 avg line is still trending up
Volume although substantial was not as much as the previous vol when 10.5 was hit & I see it as buying and not selling as such.
A large Doji bar / candle has formed.
Negatives.
Stoch 5 has turned down & crossed below the sig line from just below 50.
Stoch 14 has also crossed below the sig line after crossing into the bullish zone on the previous bar.
MACD & Histogram have crossed into negative territory again.
The Doji can be a negative (as well as a positive) because it has closed below the mid point of the days range & near the support zone so is not entirely positive.
Outlook.
The daily chart atm (ignoring the reasons behind the dump down to 10.5) looks the same as a normal shakeout and that is how I see it as well.
Support is 10.5 – 11 and resistance at 12 – 12.5
Looking forward and taking into consideration the issue price of 0.10 & the ex entitlement date of 12/3, I would expect to see the trading continue in the 10 – 12 range until then but wont be surprised if we move back into the 12.5 – 14.5 range before then
The large doji candle / bar which formed as the close recovered up from the 10.5 support is usually a positive sign but the support will likely be tested.
I don’t expect that the gap below will be filled but the potential is there for it to be tested.
Great buying at this level & no reason at all for selling
Weekly
Again, ignoring the reasons for the sp drop the chart shows what I would normally consider as a so far successful attempted shakeout.
Positives
An RSI divergence is apparent on the weekly (sp making a lower low while the RSI is not)
Stoch 5 is above the avg line & both are still rising.
Support at 10.5 11 held making a potential double bottom.
Negatives
MACD is below & has widened away from the sig line.
Histogram has dipped slightly but still shows a divergence from the MACD in that it has made new highs while the sp remained flat to down.
Volume increased on the prev week as the sp tested the support.
The close is at the lower side of the range.
Outlook
I would expect the support (10.5 – 11) to hold but it is likely to be retested.
My weekly alert model shows that there is an 78 – 83% chance that there will be a lower sp during the week than last weeks close.
Until this latest ann the momentum was building and I believed that we were on the cusp of a reversal.
The fundamentals continue to improve as the company goes about its business , that will continue regardless
I believe that once this rights issue is behind us that momentum will return.
(20min delay)
