Baobab Resources (BAO): On Course For A Return Towards 50p

PUBLISHED: 04 Jan 2013 @ 01:29 | Comments (0) |

Here are the latest extracts from Zak’s new premium blog AIM Stocks Charting

It stars the likes of Petrel Resources (LSE:PET), Leni Gas And Oil (LSE:LGO) / Gulf Keystone (LSE:GKP) and most recently highlighting quadruple support for Gulfsands Petroleum (LSE:GPX) under 80p.

Baobab Resources (BAO):

Although it would be incorrect to suggest that the extended reversal that we have seen on the daily chart of Baobab Resources over the past year has been an easy one to get a handle on, now that there has been a near vertical break to the upside for the shares over the past 6 to 8 weeks, it would appear that we are looking at a classic extended base building process. This should be followed by a U-shaped reversal formation which should take the stock back to the early 2011 resistance over the 50p mark.

The timeframe for the eventual move would be the next 3 to 6 months. However, in the meantime we are dealing with a stock which is overbought to an extreme degree in the near-term, with the expectation being that there will be a retracement back towards the main 2012 resistance zone through 16p. A useful charting point in the meantime would be the floor of the December gap higher at 19p, which currently makes for the best end of day close stop loss for those attempting to hold the shares for the first part of 2013 and waiting on a 2011 retest.

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