Potash Trade Update: Up 8% So Far But Time To Tighten Up Those Stops

On Thursday 12 January I wrote about a potential trading opportunity that was setting up for the Canadian fertiliser producer, Potash Corporation. The stock had formed a bullish Inverse Head and Shoulders pattern which it subsequently broke out of.

Since that time the stock has risen 8% and is now well in its way to my target of $49 – $50.

In my original article I wrote “I would like to see a decisive breakout above the neckline on high volume. I would then expect the price to dip to retest the neckline, which would switch from being resistance to being support. The price should then advance to my price target at around $50.” So far, this is exactly what we have seen.

Potash broke above the neckline at $43.75 on 13 January reaching $46.19. It then came back and bounced at $43.91 before advancing strongly to today’s price of $47.25.

Original Chart (posted 12 Jan 2012) Potash Corp. [NYSE:POT]

Today’s Chart Potash Corp. [NYSE:POT]

We are now well on the way to my $49 – $50 target area but given that the Stochastic Oscillator, William %R and the Commodity Channel Index (CCI) indicators all show the stock towards the upper end of the scale, it’s definitely time to tighten up those stops.

A 3 Month Chart Of Potash Corp. [NYSE:POT] Showing Three Technical Indicators

Charts courtesy of Stockcharts.com

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