Follow up to this post - The daily chart did give a buy entry with the breakout over $4.50, however it was short lived and appears to be another false move. Broken support levels now suggest new lows will be seen in coal. Weekly chart also very bearish. I am still in the camp that the risk is mainly to upside in this sector, however as of now it's dead money and should just stay on watchlists. Short term trades on both the long and short side are doable if so inclined.
See original Notes below: No long position yet, but coal is looking like it could be setting up for a move higher. Looking at charts of coal stocks over the past 5 years shows plenty of false breakouts and a reverse lower.
The difference here is we've recently seen a good amount of false breakdowns and continued basing without moving substantially lower. This sort of action demonstrates the possibility that selling has actually dried up.
RSI is shaping up on ACI for a move higher with price testing resistance on the symmetrical triangle. A breakout here isn't necessarily an immediate buy, but it certainly sets the stage to put coal stocks back on your long watch list to enter on pullbacks. I picked ACI as it's cheap on a relative basis and left for dead, so long term holdings should consider adding if a bottom is confirmed.
More to come in the near future as follow ups.
Comments
JesusDiaz
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I have been waiting to get in some natural resource plays. NEM is just one example
JesusDiaz
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Increasing volume, head and shoulders setting up, double bottom on the weekly, and in general I think equity firms are moving to commodities and natural resources
TheSessionMaker
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Good analysis. I agree. It's looking like some solid setups are taking shape.
JesusDiaz
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I am bullish on natural resources also. The second breakout candle after the bounce of the lower trendline would have been a great entry
TheSessionMaker
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I agree with that, though only on a short term basis since natural resources have been dogs and continue to have trouble breaking out. I prefer for long term plays to see the first real signs of a move higher before entering, i.e. a breakout of a basing pattern.
Do you have open long positions in multiple natural resource names or not yet?
I have been waiting to get in some natural resource plays. NEM is just one example