Sapphire reached $0.365 on 10 Oct 2016, one bid below my measured eventual technical target of $0.370. Since then, it has fallen 14% to $0.315 on 17 Oct 2016. Will it continue to slide further?
Sapphire has largely been trading within the range of $0.240 – $0.305 since 25 Jan 2016 before it broke out on 6 Oct 2016 above $0.305 on heavy volume. As previously mentioned on my 19 Sep 2016 Sapphire’s write-up (click HERE), the upside breakout above $0.305 points to an eventual measured technical target of $0.370. This was attained when Sapphire reached $0.365 on 10 Oct 2016 before profit taking sets in amid low volume.
Based on Chart 1 below, all the exponential moving averages (“EMAs”) are trending higher with multiple golden crosses formed. Amid positively placed direction indicators, ADX closed at 41 which is indicative of a trend. RSI has slid from 82 on 10 Oct 2016 to 53 on 17 Oct 2016, thus it is no longer overbought. Although OBV has come off from a multi-year high set on 10 Oct 2016, OBV is still at elevated level which bodes well for Sapphire.
Near term supports: $0.315 / 0.310 / 0.305
Near term resistances: $0.330 / 0.365 / 0.385
Chart 1: Profit taking likely to taper off
Source: Chartnexus chart as of 17 Oct 2016
Personal view / conclusion on the chart
Based on the above chart, my personal view is that Sapphire’s chart seems to be a classic, or “textbook” example. It illustrates the following:
a) How Sapphire’s price breaks out of $0.305 with volume expansion;
b) Attains the measured technical target price around $0.365-0.370;
c) Pulls back on low volume to resistance – turned support area around $0.305 – 0.315;
d) Before staging the next “higher high”.
Notwithstanding my personal view on the chart above, I wish to emphasise the following:
a) There is definitely a possibility that Sapphire may have some negative reasons (unknown to me, but known to the market) which cause the price decline. For now, my view is that this is a healthy consolidation phrase;
b) A sustained break below $0.300 with volume expansion is negative for the chart.
Readers who wish to know more about Sapphire can refer to their informative website HERE. You can also refer to my write-ups on Sapphire below
a) Sapphire’s substantial shareholders increase stake in Sapphire at $0.265 (19 Sep 2016) (click HERE);
b) Key takeaways from Sapphire’s 2QFY16 results briefing (12 Aug 16) (click HERE);
c) Sapphire’s order book hits a record high (15 Jul 2016) (click HERE);
d) Sapphire’s chart strengthens (5 May 2016) (click HERE);
e) Sapphire – proxy to infrastructure growth (5 Feb 2016) (click HERE).
Please refer to the disclaimer HERE