EMI

[paulperryman]

EMI has reversed the breakdown through the support level of £5.18 setting up a new small rising channel, within the larger falling trend channel. Is this new direction strong enough to win out over the larger trend line? I believe that there is a more than even chance that it will because of the way that the price has cut up through the 5&10-day sma's, whilst the 5-day sma has already cut through the 10-day sma and the pull-back of the price to the 5-day is, as we know, usually akin to winding up the "spring" ready for a major bounce; this could fly by about £1 like it did recently if this interpretaton of the T.A. is sound...any views on this would be welcome...T-trade perhaps? PaulPeryman.

 

[Riz]

not necesarily...

Hi Paul,

Most recent high activity of EMI share price is due to the continuing talks on its merger with its German rival...a confirmation or denial of those talks will certainly have a great effect on the price...

As for TA, I am afraid I can't see signals of an immediate big rise...the only positive signal is stochastics being sharply up with K over D, still K have already hit the overbought line and such cross overs are more effective when occurring at the oversold areas...RSI is still flat..MFI and OBV ticking down...as for "the pull-back of the price to the 5-day is, as we know, usually akin to winding up the "spring" ready for a major bounce"..this isn't always the case...even the EMI chart shows some previous such occassions where the price kept going down instead of bouncing up..

Over all I think it's best if you wait and see if the 518 support level holds..because if not 502 and 497 are the next ones...keeping in mind that 490 is year low and forther down might be very risky...
P.S. trying to insert a full chart with various indications..

good luck

(no financial advice intended)

rizgar

 

[paulperryman]

Many thanks for your reply. I see the point about previous such patterns not having worked as I suggested; however, that was before the recent selling climax which has shook out the weak holders. I agree that the type of pull-back pattern we have discussed would normally work best from a more oversold position; but this has the advantage of increasing money flow from a lowish OBV, coupled with a changing trend pattern, which is what makes this particular case somewhat more interesting than most IMHO. Thanks again Rizgar; any more views appreciated. Paul Perryman.

 

[Riz]

pulled back..

Careful with this one..pulled back to 500..might be quite risky if it doesn't reverse above 490...

rizgar

 

[ChartMan]

A steeper down channel has recently formed, adding weight to Rizgar's observations.I see support at 490/500 with resistance at only 530, leaving a very small margin for any trading. Velocity has just rolled over,and going negative indicating more downside.The recent velocity peak shows positive divergence against price, ( a good point) but until there is a higher low on velocity, the likelyhood of a turnround is slim.
Further support can be found at 460 and 435......

 

[Cigar]

Nice OBV, TCI and RSI bullish divergences now in position. Volume been increasing over the last 5 days.

Very tempting

 

[ChartMan]

Agreed, but the reward is not high with resistance @517p, but risk is low...so overall a reasonable R/R ratio.Stop loss @ 470 is safe.Still in the balance at the moment.

 

[Riz]

yes, looking better now...

Agree, chart looking better now..price bounced to cross over lower BB and aobut to hit 5 day EMA..indicators +ve with stochstics K ticking up to cross over D at the oversold area whil RSI and OBV heading up and MFI flat aorund 60ish...

It's the merging rumours causing the share price volatility..excluding this plenty of resistance and risk of heading down to 470ish...be careful with this one..

rizgar

 

[Cigar]

Just checked todays trades (from iii):
Buys..27%
Sells..68%
Others..5%

We'll watch a little longer