Zak Mir on Ultra Bullish Momentum Charting Set Ups: ARM Holdings, Tungsten Corporation and Dechra Pharma

Given the imminent breakup of the United Kingdom it may not be the best time over the past three hundred years to find bullish charts. But then again, as the saying goes, there is no time like the present.

In fact, prior to the weekend’s “shock” poll regarding the possible intentions of our friends north of the border, the FTSE 100 was at 14 years highs and looking rather sprightly. Nevertheless, I have to admit that while shorting the index may have turned out to be an obvious and wise idea, there were – and still are – examples of ultra bullish charts and setups on them which are perennial and which it worth sharing.

ARM Holdings (ARM)

First up is a timely offering given that we are in the run up to the big Apple (AAPL) revelation regarding the new iPhone and iWatch. This is from the daily chart of UK chip designer ARM Holdings (ARM) where we are in the aftermath of a July bear trap rebound from below former May support.

Clearly, the stock is already well off the bottom. However, the attraction here is that the past couple of weeks may have served up a bull flag either side of the 200 day moving average now at 945p. The start of the week has backed such an idea with a key reversal to the upside from below the 200 day line.

This now suggests that while there is no end of day close back below the key moving average we should be primed for a new leg to the upside. Given the suspicion is that we are looking at a mid move consolidation the suggestion is that we are due another 150p plus equivalent to the move we have seen from the July low and can add this to the low of 8th September. This would equate to a journey to the top of a rising trend channel as high as the 1,200p level over the next 4-6 weeks.

Tungsten Corporation (TUNG)

With Tungsten Corporation (TUNG) we are also looking at a very positive charting position, with the message being that even though there have been significant gains to date since the floor was made in April just above 200p. Since then the ascent has been within two bull flags.

The first was an extended formation between May and the middle of August from which there was a breakout into a more conventional bull flag formation by the end of last month and going into the first week of September. The price action for the flag has consisted of a bounce off the green 10 day moving average at 362p, with a break above the flag top at 368p offering the latest part of the rally.

While there has already been a substantial climb here, the suggestion is that at least while there is no end of day close back below the initial flag high at 368p we could see a 4-6 week target at the top of a rising trend channel from November last year.

Dechra Pharma (DPH)

Finally, we have a situation at Dechra Pharma (DPH) which may not appear to be substantial, but it contains what can be regarded as something of a golden nugget of a charting formation. This takes the form of  a September bull flag break out.

The added bullish bonus here is the way that the bull flag rests on an unfilled gap to the upside, indicating sharp upside momentum. This idea is added to by the latest gap to the upside through the top of the gap.

All of this implies that while there is no break back below the August resistance / bull flag top at 740p we could see upside which is significantly greater than the top of a rising March price channel at 790p. But at least this makes for a decent one month target for the bulls to shoot for.

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