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Technical Analysis Of Alliance Mineral Assets, SGX

As the stock nears the old highs, Alliance Mineral is looking to breakout higher. Will the breakout follow through?

There is always an exciting feeling with a mixture of fear as a stock reaches a former high.

The questions on the minds of investors and traders will be:

  • Is the stock going to shoot up higher and go above the old highs?
  • Or is it going to be stuck there and then reverse lower?

To get a clearer picture, we need to consult the charts along with fundamental analysis. I will be doing a technical analysis here, so if you can complement it with your own FA, that will be perfect.

I do not follow Singapore stocks but I still find that technical analysis principles apply to any stock in the world. After all, its human beings who trade and invest in stocks.

And whether you are an American, Malaysian or Singaporean, the emotion of greed and fear will affect investment decisions for most people. So, the charts can tell a lot of story on what people are thinking.

technical analysis of Alliance Mineral Assets

The chart above is the daily chart of Alliance Mineral Assets.

As you can see, the stock is at the area of old highs. Not only from last year but you have to go way back to 2015 to realize that the stock is now at an area of former highs.

At this moment, I would draw two lines for my analysis. First, we will draw a horizontal line at the highs and then an uptrendline that connects the lows. Some may even see this as a rather big ascending triangle. 

What is clear is that the stock is making same highs and higher lows. This usually means that the stock does not want to go lower. It is very clear it is trying to breakout higher.

Recently, it broke out of a mini daily ascending triangle as it hit the 50 day moving average. I believe that if Alliance Mineral can stay above the uptrendline I have drawn, its path of least resistance will be bullish bias.

Furthermore, the rising 200 MA gives me confidence that we should be bullish bias in the longer term.

Let's have a look at the weekly chart of Alliance Mineral.

After forming a big weekly ascending triangle bottom, the stock shot up tremendously in 2017. As you can see, as the stock reaches the old highs back in 2015, it collapsed. This happened two times.

You have to realize what is happening psychologically. Imagine the people who lost money buying the stock back in 2015. When the stock price nears the old highs, what do they do? They sell to recoup their big losses. Two times they did it.

So, I believe the two rallies back up to the 2015 highs will have absorbed enough supply to enable Alliance Mineral to go higher this 3rd time. The rising weekly 20 MA and 50 MA also points to a bullish bias.

Hope this helps.

Have a great trading and investing week!

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