KAT Exploration Inc (KATX)

[Rick-UK]

KATX Chart Analysis




In Green

We have a cup-and-handle formation, consisting of a very strongly formed rounded bottom (a strong indicator in itself) and a smallish handle (ideally the handle would be a little wider, but you shouldn't expect perfection in chart patterns). Both a rounded bottom and a cup-and-handle are strong indicators and indeed immediately afterwards we see a new upward breakout. http://www.thestockbandit.com/cup-handle/


In Blue

This is our previous resistance and is now our strongest support with multiple touches. Throughout April as the rounded bottom was forming we had strong support from the 20 day MA. This is our backstop, worse case scenario support, very strong indeed and currently at 0.063. We also have strong support from the 10 day MA which is currently at 0.080 and I would doubt we would drop below the 10 day MA. Of course we then have this great support from multiple touches at around the 0.085 mark.


In Orange

Finally we have the potential of new support from our earlier resistance at 0.093, which of course we are currently on. IF we stay above 0.093 today then this will form our new support line. Even if we dip below 0.093 today I believe we will pop back up fast. The pullback to test 0.093 is actually very strong for us as it gives us a second touch on the chart at this 0.093. Once we are above 0.093 again this means we have stronger support there on an ongoing basis.

Parabolic SAR

Parabolic SAR has not flipped, indicating continued upward trend.




Current upward trend in Orange

First Step In Green

Note that we trended up, then we had a healthy pullback for profit taking, then we continued upwards. Standard, textbook stairstep progression.

Second Step In Blue

Note that again we trended up, then we had our expected healthy pullback for profit taking. Now two things could happen...

IF the pattern continues and we hold 0.093 we will see a strong upward trend into blue sky territory

IF the pattern does not continue and we do not hold 0.093 we will drop to the next level of support at around 0.085. If that breaks (which I doubt) we will see even stronger support at 0.08. At this point KATX will regroup ready for another assault to get us over 0.093 and back into blue sky territory.

Fundamentals

When news hits that drilling commences we will be back above 0.1, it's as simple as that. The Technicals say if we could hold 0.093 today we'll be good for a further upward trend, but if we lose 0.93 we will be supported at 0.085 or worst case 0.08 and as soon as we get the announcement from Ken we'll be back up.

This dip is just about activity from very short term traders, nothing more. We know the drilling is going to plan for Saturday. If traders are prepared to wait until Friday or absolute worse case Monday for the announcement then we continue up. Otherwise we regroup in mid 0.08s and assault the 0.1s again next week.