Last Thursday I wrote about a potential trading opportunity that was setting up for the Canadian fertiliser producer, Potash Corporation, and it now looks as though the trade it playing out as anticipated.
In the 12 Jan article I wrote, “In order for this trade to pan out, I would like to see a decisive breakout above the neckline on high volume.” As the chart below shows, this is exactly what has happened.
A 3 Month Chart Of Potash Corp.
Chart courtesy of Stockcharts.com
Note: The long red arrow on the chart is intended to suggest the future direction of the price, not that this move will occur in a single advance.
In the original blog post I then went on to say “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.” If the price does indeed dip to test support at the neckline (around $43.50) this would represent an excellent entry point for those not already long POT.
Stops should be set just below the neckline with enough room to allow for a tree shake.
I will continue to follow this trade and update you as it develops.