What is apparent on the daily chart is that the latest rebound for shares of Sirius Minerals (LON:SXX) could be the event that finally starts to unwind what has been at times over a year and a half of painful consolidation for the shares. This point is underlined by the way that even after the latest revival the stock is trading significantly below the former 2011 peaks above 30p. In terms of what the term outlook here should be, we are looking at a classic reversal following an extended period of bullish oscillator divergence in the RSI window since the beginning of December.
Typically, this divergence is a leading indicator on price action, although there are still timing issues for those who wish to avoid such periods where there can be “selling climax” lows, before a sustained rally can get under way. Indeed, the present rally managed to take root following the recovery of the initial 7.26p floor.
This allows us to assume that at least while there is no end of day close back below this level, we are right to chase the share price higher. Indeed, only cautious traders would wait on an end of day close back above the 50 day moving average at 8.93p before assuming a journey to the 12p plus autumn 2014 resistance zone is on its way over the next 1-2 months.
