Metals & Mining sector looks to break out to upside
The Metals & Mining ETF (XME) in the US looks poised to continue its resistance breakout with obvious positive conntations for the UK mining sector (that we are very bullish on right now).
The chart below shows the XME first broke resistance with a big surge in early September and broken resistance turns into first support in the 43 area. This is a classic tenet of technical analysis: broken resistance then becomes support. A so called “spinning top” formed at the end of September and the ETF consolidated the next seven trading days. Monday’s high marks short-term resistance and a close above this level would be bullish. This would reinforce support in the 43 area and increase the chances of a continuation higher.
|
Also, note that there is a possible inverse head-and-shoulders pattern extending from June to early September. XME broke neckline resistance and the September decline is a throwback to broken resistance. The XME:SPY is a measure of the mining sector relative to the S&P 500 – we can see a clear rising trend line further supporting our bullish thesis for the sector. Our picks are Vedanta, Lonmin, Bumi & ENRC. |
Comments (0)