Coal is Bottoming – Not Breaking Out
- Posted by Greg Harmon
- on October 12th, 2012
There is a lot of interest in Coal as a bottoming reversal play. Some coal stocks have had speculative moves higher only to fall back in to the bottom. From my perspective the good news is that Coal has stopped falling, but it still has some work to do before it can be said that it is reversing. Take a look.
Market Vectors Coal ETF, $KOL, Daily
The daily view above shows the move from July last year lower. The Gann Fan lines show that it made a move to the 1/1 line and rode it lower before the move through it during the current bottoming. It also shows that it has resistance at 26 to break through before any celebration can begin. On the weekly chart below there are many positive signs, but no confirmation of a move higher. The Bollinger bands are very tight ahead of a move with a Moving Average Convergence
Market Vectors Coal ETF, $KOL, Weekly
Divergence indicator (MACD) that has been trending higher and crossed to positive and a Relative Strength Index (RSI) that is trending higher. The resistance from the daily chart shows up as the 61.8% Fibonacci level from the 2008 to 2011 move higher, strengthening it. So a lot of positive indications but no party until a break of 26. Carry on.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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