AAM 0.00% 2.0¢ australian industrial minerals limited

technical thoughts

Currently unlisted. Proposed listing date: WITHDRAWN
  1. 4,418 Posts.
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    I'm looking at a 3 year chart with DMI/ADX; RSI; MACD; Bollingers and 100/200/300 ema

    The one thing that really grabbed me was the extraordinarily low ADX - somewhere about 11.

    ADX provides guidance on trend strength not direction. Low ADX levels indicate trend weakness. ADX above 40 indicates strong trends.

    ADX has been falling for some time ever since early May - this being the bottom of the recent retracement to 18.5c. So does this mean the 'up trend to 25c' is weak?

    I also looked at the nuber of time ADX went this low over the last 3 years. Only three times has it been at these levels: Dec 08, Apr09 and Aug09.

    DEC08 signified the onset of a major fall from 30c+ eventually to 7c. RSI and MACD confirmed the falling trend.

    APR09 signified the 100 ema moving above the 200dma. The SP rose quickly thereafter, but only briefly as consolidation took place.

    AUG09 signified a significant tightening of the bollengers - a period of price stability and consolidation. Soon thereafter the SP jumped to a 42c high.

    Todays low ADX is supported by a positive MACD (above 50) and uptrending RSI. Bollengers are also rapidly tightening. The uptrend is weak at the moment but downside appears very limited (other indicators). The 100/200/300 ema's are behaving themselves nicely (not crossing over) although they are compressing.

    All this gobbledegook suggests to me that we are in for a period of consolidation / range bound trading. Perhaps the bottom of the range has not been set as yet. The SP might look for a bottom (yet again) somewhere around 23c I imagine) although with this theory this bottom will be balanced by an upper limit say 26-27c. This pattern is not unlike the April09-Aug09 period, this preceding a breakout to 42c.

    If the breakout to the upside occurs it will be aligned news such as excellent gold recoveries and low operational costs = high profits. Or it might be news such as converting resources to reserves/ upgrading JORC reserves/ resources.

    For now I'm happy with the range bound trading. Consolidation/ accumulation is good at these levels. When excellent fundamentals reveal themselves to the wider investment community we will see the cok pop off this beauty.

    Holding and waiting .....

    GC
 
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