Edenville Energy: “Rocket launcher” setup comes up trumps

I have to admit I liked the story behind Edenville Energy (LON:EDL), emanating from late summer last year onwards, that the Tanzanian Government had banned coal imports. By rights this should have made the shares climb vertically, something which would have been all the more pleasing given the way that at the time they were loitering near the low end of the year range.

Indeed, the possibility there could be a decent spike for the stock was flagged by one of the better reversal signals in the technical analysis armoury. This comes in the form of a gap through the 50 day moving average. Interestingly, this so called “rocket launcher” signal was delivered just after the news was announced from Tanzania.

But then, just days after, there was a gap to the downside. However, my take on the situation at the time was that once the signal was given, it would eventually prevail. In fact, the wait was rather longer than expected at nearly six months, reminding us that patience is a virtue.

The position now is that we are most likely seeing a mid-move consolidation above former post August resistance at 0.7p. At least while there is no weekly close back below this zone one would be looking to an eventual 3-6 months technical target as high as 1.6p at the top of a rising 2015 price channel.