I received a question from @anonymous on CEO.ca asking if there was a double-top forming in Mason Graphite (TSX-V:LLG). This is a good question because if you look at a shorter term (3-month) chart it looks like we could certainly have the beginning of a double-top:

LLG.V (Daily - 3 month)

However, zooming out out to a longer term chart we can see that LLG has been consolidating for the last 8 months after a large move higher in 2016 which saw the stock rally more than 400%:

LLG.V (Daily - March 2016-May 2017)

LLG is hitting its head on resistance near C$1.50 for the 5th time since September 2016. While this resistance could prove to be a steel ceiling for the stock, from my vantage point the odds favor a breakout above this resistance at some point over the coming weeks.

Here's why:

  • LLG is in a longer term uptrend, consolidations tend to resolve in the direction of the controlling trend.
  • Relative Strength is in bullish territory and the Money Flow Index (MFI) is pointing higher and not yet in overbought territory.
  • The more times a level is tested the more likely it is to break-through it; C$1.50 has been tested 5 times in 8 months while LLG has made a series of higher lows/higher highs since its correction low in January 2017. 
  • The selling above C$1.50 has not been aggressive, it's been more of a case of buyers laying back and not being as aggressive when the stock reached at/or above this level.

A breakout would target a move up to at least C$2.00 while my bullish interpretation of the chart would be reassessed on a move down below C$1.25. I should also add that I will be interested in the volume over the coming days/weeks and any clues that might be offered by level 2 market depth on CEO Pro


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