A ZAK MIR technical update on an SBM Conviction Buy Call – EMED Mining

EMED Mining (EMED): 14.23p

Although it has to be admitted that there has been plenty of near term noise on the EMED daily chart as far as the price action is concerned, the overall technical position, to me at least is surprisingly clear and concurs with the Conviction Buy Call that SBM placed on the stock at 9p last year.

Essentially, since the end of 2011 we have been treated to an extended positive reversal, one that has taken the form of a U shaped formation (or also known as a “saucer” bottom). Indeed, this structure can be regarded as highly bullish in the sense that the clear promise is for the pattern to complete itself via a return to the initial 2011 resistance through 22p. In fact, the start of the constructive phase here came in May last year with the higher support zone put in at 7.5p versus the two year lows at 5.75p. Ironically, we can be even more confident of a potentially substantial upside scenario given the way that in the subsequent recovery for EMED the shares have served up several bear traps in over the last 12 months below the 200 day moving average currently at 9.97p. The last of these traps was just below the 10p level at the start of this year – a sign that the stock was determined to ensure that would be bottom fishers here would find it as difficult as possible to remain in the position prior to the big recovery we are now seeing in the shares.

As far as the outlook over the next 1-2 months is concerned for EMED, the view is that while the broken post March 2012 red resistance line at 13p acts as new support ,we can expect an accelerating move to the upside. The target, possibly as soon as the end of March, is as high as the initial 2011 peaks through 22p but we would caution that given the high RSI measure that the stock needs to consolidate first.

Here are our prior blogs to update you on our thinking – http://www.spreadbetmagazine.com/blog/2012/8/25/emed-mining-update-sbm-trading-buy-call.html

http://www.spreadbetmagazine.com/blog/2012/10/3/new-regular-blog-feature-by-zak-mir-starting-with-2-big-stoc.html