It could be said quite fairly that to date it has been an interesting journey as far as shares of Kanabo (KNB) have been concerned, not least on the basis that the stock caught the full force of the Q1 bubble for small caps this year.
6 months later and it would appear that there are signs of stablility, not only helped by newsflow such as we have seen today, but also from the technicals of the daily chart. The key here has been the rising 200 day moving average currently at 17p, This provided a bounce for the stock in July and also so far this month. While there is no end of day close back below this feature a rally back towards the main February resistance line and last month’s resistance at 25p could be forthcoming as soon as the end of next month.
Sticking with a relatively new company to the stock market, and one in a similar space to Kanabo – at least sectorially, we have Oxford Cannabinoid (OCTP). The latest breakthrough announcement from the group may finally be enough to move the needle as far as what has so far been a disappointing share price trajectory. While it has appeared that the stock is bumping along the bottom, it needed the kind of newsflow we have been treated to today to give the bulls a chance of getting back in the driver’s seat. The technical plus point to start Wednesday is a gap higher through the 50 day moving average at 2,7p. Indeed, the longer the stock can remain above this feature and the uptrend line from last month at the same level, the greater the chance of a rebound back towards a June price channel top at 4.5p over the next 4-6 weeks.
Another stock that has been bumping along the bottom in recent weeks is Arc Minerals (ARCM). Here there was notable bullish RSI divergence in recent weeks, with the oscillator trace rising, even as the share price held the lower levels. Clearly, this was a time of accumulation, something the latest gap to the upside underlined. The gap higher is all the more significant given the way that it follows the gap down for the stock seen in July. The result is a so-called Island Reversal, the charting equivalent of a handbrake turn. Ideally, an end of day close above the floor of the gap down at 4.4p could lead Arc back up to post April resistance between 6p and 7p as soon as the end of next month. Only back below the August resistance zone around 3.8p really delays the recovery argument.
In terms of the set-up ahead of today’s gap to the upside, it can be seen on the daily chart of Pembridge Resources (PERE) that it was not a million miles away from Arc Minerals described above. In particular, there was bullish RSI divergence after the initial narrow September bear trap for the shares. The fact that Pembridge has so far gapped up through both the 50 and 200-day moving averages implies that there is enough momentum to clear the main post-May resistance in the 7p zone. A decent close above this level should allow the stock to recover part or even all of the decline from May resistance near 12p early in the first part of the autumn.
Narrow bear traps in stocks or markets may not look like they are that significant, but in fact, the opposite is true. They represent the action of attempting to flush out the last of the longs ahead of a move in the direction that they were hoping for. In the case of Alien Metals (UFO), ahead of today’s rebound, we were treated to at least a couple of weeks of September price action below the former July support towards 0.7p, Once again, bullish RSI divergence with the slightly lower prices this month implied a turnaround could be in the offing. The latest May trend line break and clearance of the 50 day moving average at 0.8p opens the door for a rebound towards that month’s 1.20p zone peaks as soon as the end of next month – while 0.8p holds.
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