POTASH base on base
With the global Green Revolution buckling under pressure of bio-ethanol, drouth, and wheat and rice shortages, Potash is in the green lately. Let’s look at the chart as a near-text book example of base-on-base growth:
At point A, the stock sagged along with the rest of the market in January, carving out a cup with handle base. It made a decent advance before creating a new base, what we’ll identify as a Double Bottom base, as it made a lower low at Point B. The base buy point would be just above Point C.
Note how as the stock advances it dances along the 5 day moving average (Point D). That is as strong a ‘tell’ as I can find that momentum money is chasing a stock. (Sell stops below the 5 day moving average might be a good trade idea.) Point E is an intermediate price rejection and reversal. Look for a new base to form and support at the 50 day moving average (way down under $170.)
