NCM Fan Formation & Base Protection

With the recent fall in gold not helping its cause, NCM remains pinned to its downtrend. We currently see a downward fan formation, and a positive protection of the key low (thus far) reached at 20.89 in July last year. The weekly chart shows a possible setup for MACD to run into positive territory, with bullish divergence seemingly around the corner just beneath the level of zero. If this eventuates, we may see NCM move back towards 24.40 to the resistance levels of the current channel it finds itself within.

Trading ranges are becoming more compressed as we move towards the apex of the triangle, and this leaves the door open for a breakout to either side. Resistance may be provided by the 10WMA, but conversely, there is support of 20.89 and uptrending support dating from July 2012 to keep price levels buoyant. A breakout past the first downward trending level of resitance may give NCM impetus to arrest its decline and see breakouts to subsequent levels of overhanging resistance given the fan formation setup.

The fan formation is again highlighted in the daily chart. Bulls will want price action to stay within the current up channel and move towards a test of the 78.6% retracement levels of 22.83. This would bring the next level of resistance from the fan into play. Stochastics are also reversing away from extremely oversold regions, and bullish momentum here may help fuel a short term rally. Another possible pattern that may be in play currently is the reverse head & shoulders with a neckline of 22.83. Again, this would seem to support a breakout to the upside, at least to the 61.8% levels of 24.36. However, we must also watch the 20DMA which is currently testing the 50DMA. A 'death cross' here may keep a lid on prices.

 
If we look towards the middle of 2013, we can see a clear descending triangle. This further highlights the base of 20.89 will be the key number to watch between now June - a decisive move either way should be known before then.

The hourly chart shows a break out from the resistance of the wedge, now clearing the path for a rally. As long as the channel's support holds on Monday, this would seem to suggest a move back towards 23.00-23.20. Stochastics would seem to support this with an inflection point reached before the close on Friday. But the MACD may also be showing a reversal towards zero, and bears may be given strength to breakdown the rally quickly if negative territory is reached.