NEM: Tug of war going on between the bulls and the bears

Proshare

Tuesday, December 8, 2015 09.30 AM / Harish Shahi, The Analyst 

A closer look on the daily chart of NEM reveals that earlier stock was falling down consistently due to pressure supplied by downtrend lines and is making successive lower highs and lower lows. It seems the bears are beating the bulls black and blue and dominating them at every nook and corner.

Stock has declined from N0.95 to N0.60 with a sharp sell-off and we can see bloodbath on the daily chart. After arriving at an oversold territory of N0.60 level, we saw panic reactions where the bulls refused to move down further and a counter-attack appeared which created hope for the bullish momentum at the initial level.

The counter-attack from the bull’s camp was limited to N0.75 level and then the bulls and the bears entered into a small consolidation phase where both are unable to move on either side and thus we observed tug of war between the bulls and the bears.

Stock is trading above all major and minor EMA lines and generating neutral to bullish signal. A valid breakout of N0.75 level will open the way towards N0.85 and N0.95 level.

If it sustains above N0.75 level, then it will change our view from neutral to bullish. It will provide further presence of buyers and will provide more strength to the bulls; this could trigger acceleration to the upside with N0.95 as next target.

All odds are in favor of the bulls and indicating a bullish signal. Both investors and traders are displaying bullish tendency towards the stock for the time being, they will get more aggressive once it trades and settles above N0.80 level.



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What Next?
A gravestone doji followed by low volumes candles like morning star and many different doji are generating neutral signal for the time being.  A bullish crossover on MACD indicator is also favoring the bulls. Both RSI and CCI indicators are providing bullish signal from a negative territory.

Intraday bias remains bullish on the stock as long as N0.60 level remains intact. The N0.80 level is key resistance level followed by N0.90 while N0.60 can be considered as key support level followed by N0.50 level.

Trade Idea:
Based on the charts and explanation above, traders can buy at N0.68 for the target price of N0.80 and N0.90 with the strict stop loss of N0.60. The tentative time frame would be 6-8 days.

NB: Return on Investment based on trade idea above does not take cognizance of brokerage commission

Related NEWS
NEM Declares N2.11 bln PAT in Q3 2015 Result SP N0.70k - Proshare

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For further details, kindly contact 
analyst@proshareng.com

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