Australia’s Prime Minister, Tony Abbott may dislike the sight and sounds of whirling wind turbines, but there is little doubt that renewable energy sustained by rechargeable batteries, is likely to be increasingly the way of the future. Many consumers will welcome the ability to become energy self-sufficient, but this is not to say that we will no longer need fossil fuels to power the nation any time soon.
A previous post has reviewed Redflow Limited, developers of the rechargeable Zinc Bromide Flow Battery, a strong candidate to capture a significant segment of the rechargeable battery market for both commercial and domestic use.
Is it time to buy into Redflow Limited?
This post is for information only, specifically in relation to technical analysis. Readers interested in investing in this stock should consult with their stock-broker or other financial consultant for advice specific to their needs.
The chart above is a 12 month daily candlestick chart with Fibonacci retracement levels superimposed. RSI and Volume data are appended. Observations:
- After making a high of 40 cents 24/10/2014, accompanied by a period of high volume activity, the share-price went into decline.
- The downtrend continued to a low of 19 cents on the 6th May 2015 before starting to rebound.
- The trend line was broken on the 22nd May in a day of strong buying.
- However it was not until the 17th June 2015, after another day of strong buying that the previous high was exceeded, thus ending the downtrend and initiating an uptrend.
- The closing price for the past week was at 29 cents, just short of resistance at 30 cents
- The RSI is just under the over-bought zone at 65. The share-price has not been accompanied by any significant increase in volume.
The chart below differs in showing the multiple moving averages of Daryl Guppy.
The 4-5 cent jump in the share-price during the past week has sent the short-term averages higher and diverging, after having crossed-over.
The medium-term averages, reflecting more the behaviour of investors, have crossed-over and are now starting to head slightly upwards, but have not yet diverged.
Whilst this week’s rebound in the share-price has been driven by trading activity, the moving averages suggest that investors, attracted by reports of increasing demand for electricity storage batteries, are taking notice.
It is possible that investors may next week drive the share-price above the 30 cents resistance level. In that event it may be difficult to gain stock at prices below 30 cents.
Investors are likely to be fearful of trader selling, after taking a position. but a fall to about 25 cents would be a more favourable entry price. The other fear for potential buyers is a prolonged period of sideways trading (in a trading range).
Buyers into Redflow may need to be patient holders of stock, as undoubtedly the anticipated transition to renewable energy is likely to be some time in materializing.
Redflow may be a stock to hold long-term for the future. However it could also become a stock which captures the imagination of investors.
Categories: Chart Review