Molycorp (MCP) Showing Bullish Signals

Posted by barkand on October 20, 2011 under Bollinger bands, Candlestick charts | Be the First to Comment

Rare earth darling Molycorp (MCP) is flashing some bullish signals after its meltdown last month.

MCP fell more than 40% in just two weeks. The freefall was arrested with two consecutive “hammer” candlesticks, which formed well within the Bollinger bands. During the first leg of the decline, prices closed outside the bands five days in a row. So selling pressure was easing and those hammers were an indication that buyers were beginning to appear.

For the past week, there has been a pattern of modest accumulation. On the chart below, you will notice a pattern of relatively high volume on “up” days as compared to “down” days. With a little help from some positive market sentiment, we feel that shares of MCP could rally back to its previous trading range from $50-60.