Zijin Mining excellent example of multiple technical analysis concepts
This weekly chart of Zijin Mining (2899.hk) is an excellent example illustrating various technical analysis concepts:
- Moving averages as a roadmap that provides direction, support.
- Chart pattern reveals continuation (base building) or reversal.
- Volume as an excellent companion of price movement.
In this weekly chart, the key features to look out for are:
- A moving average roadmap comprising exponential moving averages of 4 durations – 13-week ema (quarterly), 26-week ema (half-yearly), 52-week ema (yearly) and 104-week ema (2-yearly).
- A rising equidistant channel that shows clearing consolidation high and lows, duration of consolidation and directional bias.
- High volume at point of breakout.
- Zijin persistently bounces over the moving averages – this kind of price action shows the stock complying to the roadmap and using the roadmap as a support. Both price and roadmap are rising so it is clear that directional bias is up.
- Over time, price prints an upward rising equidistant channel. The rising channel reinforces earlier observation from moving averages that bias is for an upward move. The channel itself is a visual confirmation that price is consolidating or building base. Proposition becomes clear: either wait for price to break out of consolidation pattern or attempt to buy at support. Channel low provides low-risk entry point while channel high offers target profit until price breaks out.
- After sufficient accumulation, the stock explodes upwards with high volume. We cannot tell how long consolidation will take but when price breaks out, volume is a good indicator to separate a genuine breakout from a fake one. Genuine rallies are accompanied by high volume.
This post here covers my previous post of Zijin Mining which was already looking at a bullish trajectory.
This post ‘What this moving average roadmap says about DXY trend‘ is another illustrating of using moving averages as a roadmap.