This is when Sirius Minerals shares should rebound
Our technical analyst has spotted a price level where traders might pile back into Sirius shares.
30th May 2019 08:52
by Alistair Strang from Trends and Targets
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Our technical analyst has spotted a price level where traders might pile back into Sirius shares.
Sirius Minerals (LSE:SXX)
Our last in-depth look at Sirius Minerals (LSE:SXX) was back in February at 20p and it has been getting seriously close to our 13p target.
Interestingly, since their open offer deal, a few pundits are suggesting the share price is now undervalued, even proposing some interesting rise potentials. So, is it at bottom?
To be honest, we're not sure. The price is certainly hovering at the 15p level, giving an indication a "floor" has been found.
With our distrust of the way in which the market treats investors, we'd be uncomfortable suggesting it's at bottom, if only due to the price floundering around in "lower low" territory.
There can be little doubt that trades now below 14.95p should provoke reversal to 13p and visually a bounce.
Consider this. If the price were somehow to close below 13p, actual bottom should prove to be at around 4p!
The folk who believe in chart patterns should not be confused with those who follow horoscopes or technical indicators.
Quite often, a complex sounding chart pattern is simply describing a logical mental process. The current one potentially effecting Sirius is circled in red on the chart.
The first peak is the "Hey, I don't think it will get higher, I'm taking profit" sentiment. The second peak echoes the initial one. And the third peak is fairly simple; "It's had a good run, don't trust it now, I'm out of here".
At this point, another force takes over; "Ooops, it has broken the immediate uptrend again. Think I'll just wait and see."
And before you know it, you've got a classic head and shoulders formation, one which points at reversal to 4p eventually.
Essentially, it's entirely based on how a trader will view price movements, along with the emotional cycle. More often than not, it works out, even if you have to squint a bit to recognise the chart pattern.
Our own thinking is of reversal coming to 13p anytime soon, along with a bounce at such a point. The red uptrend dates back to 2010 and should prove perfectly capable for traders to pile in, with the belief such a long-term uptrend must provoke a rebound.
At present, any rebound exceeding 22p should bring a visit to an initial 25.5p. If exceeded, secondary calculates at 35p in the future. In fact, we can even compute a best case scenario at 46p, a point where we'd again stir the tea leaves.
For now, it feels like 13p shall prove worth watching for.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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