Melbourne IT. A chart review

 

Five weeks ago Melbourne IT was identified in a post written up in the Traders’ Community Website “Ten Bags Full” as being on an upward recovery trajectory, and about to test long-standing resistance at $1.50.

http://tenbagsfull.com.au/mlb/prediction/2014/5/10/on-a-recovery-trail/518

 

 

This monthly chart suggested possible targets at $1.75 (50% Fibonacci level) and $1.95 (61.8% Fibonacci level) if a trading range break-out were to occur. The share-price has been locked in a range between $1 and $1.50 since the GFC.

A couple of weeks later, out-performing FY 2013 results, and greatly improved corporate prospects for 2014 provided the impetus for an impulsive move which has already superseded the $1.75 target.

http://tenbagsfull.com.au/mlb/announcement/2014/5/27/mlb-media-release-and-agm-presentation/1295983

Jumping in June

This break-out transforms Melbourne IT’s fortunes.

TA observations and possible implications.

  1. The share-price commenced strongly directional trending from support at $1.40 three-four weeks ago to not only test but to decisively break-through resistance at $1.50.
  2. The momentum of trending increased after breaking-out, making it difficult to pick up stock at set prices, to reach a high at about $1.84.
  3. The penultimate candlestick formed a bearish engulfing pattern, raising the prospect of a profit-taking retracement. The RSI is in over-bought range, so this would not surprise.
  4. Trading early next week should show how great the buying demand remains.The next hurdle for the share-price is $1.95 to $2. With the share-price having languished for so many years, the profit-takers will doubtless be keen to maximize their return, but equally desirous to avoid having their profit eroded in a retracement. My view would favour a period of price consolidation just under $2.

 

 

 

 

 

 

 



Categories: Chart Analyses, Financial News, Investment, Technical Analysis

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