TRADE – LSE:TALV

Here’s a thorough analysis of TALV (Talvivaara Mining Company Ltd) which is a Mining Stock I recently suggested to watch. Overall I think the longer-term bullish confluences look strong and the bearish confluences all point towards a retracement as opposed to continuation of the bearish trend.

BULLISH CONFLUENCES
– Price broke out of and closed above channel and 40sMA
– The break above previous swing highs confirms the bullish MACD divergence
– MACD is above signal line and both are above the zero line, confirming positive momentum
– ADX now above 20 which confirms the trend
– ICHIMOKU CHART: Price above kumo (bullish signal) – if Chinkou Span closes above cloud this is the strongest Ichimoku buy signal
– RATIO LINE: The descending ratio line has now broken the resistance/trend line which shows strength of the stock against FTSE100
BEARISH CONFLUENCES
– Since the breakout of the channel volume and trading range has been thin – not sure if the market is ‘catching its breath’ for the next move higher or waiting for upcoming news
– The 20 period Price Oscillator is above a historical resistance level – this suggests price may ‘snap back’ towards its own 20 sMA
– Price is now at the top of the Bollinger Band – price tends to oscillate between the two bands which points towards a correction
– ICHIMOKU: Kumo suggest support around 232 in Feb
RESISTANCE / TARGETS
363-367 Fib Cluster
350        200 sMA
SUPPORT
250        Top of price channel
232        Kumo projects potential support around Feb
220        40 sMA
200-210 Volume profile shows lots of activity around these levels
190        Swing low
OPTION 1
– Buy above 270 (Wednesday’s highs)
– Stop beneath 250 (top of price channel)
– Target 350 to 360
* Please note this is an aggressive trade but does provide a high reward to risk – may be worth only trading ½ your usual position size so is not too painful if stopped out
OPTION 2
– Wait for a pullback before buying above 270
– The reward to risk will be lower but this may provide a longer-term trade and give the Chinkou Span time to confirm the longer-term reversal
– Only as price develops will you have an idea of the retracement levels. Areas to consider are 232, 220, 200 (or use fib retracement) and enter a buy-stop above 270 if any of these levels are respected and price go higher
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