One of the buzzwords on the fundamental front in the small caps area for 2014 was Graphene, and judging by the present charting configuration of Haydale Graphene Industries (LSE: HAYD) will be one of the standard bearers going into the New Year. That said, for the second half of last year there was quite an extended unwinding of the share price here, something which is underlined by the pullback from 128p as recently as July. The selling climax came last month with a brief probe below 50p and below the present level of the 50 day moving average at 59p. The big plus over recent sessions is the recovery of the 50 day line via bull flag breakout to start this week, a significant charting event. When you add in the way that the this recovery also brings Haydale Graphene back above the late October floor and it would appear that an inverted head & shoulders pattern is in place, one that the longs are justified in chasing.
As far as what the potential upside here could be, we are expecting to see quite a sharp and extended rebound, especially given the October – December bullish divergence in the RSI window from extreme oversold conditions below 10 / 100. Therefore to pencil in a return to the 108p May support is the initial target over the next 1-2 months, with the aforementioned 128p July high in focus after that.
