LYNAS RARE EARTH (ASX:LYC) Technical vs Fundamental analysis??

2021年2月18日

LYNAS is a company that has recently come under my radar for a potential trade and upon investigation is becoming a perfect candidate for both Fundamental and Technical traders. For both styles of trading it shows very polarising stories. From a Fundamental perspective there is a long term bullish potential however from a Technical standpoint a short bearish turn seems evident. In the following paper i will outline factors for both trading styles and what potential outcome can occur.

From a Technical Standpoint:
Bearish Technical Analysis:
---> RSI overbought and has a knack to correct once hits an overvalued RSI
--> Bollinger bands above 2 standard deviations away from mean which provides a bearish signal
--. ATR is approaching all time highs which have not been met since major reversals
--> Bearish Candlestick pattern (Dark Cloud Cover) developed on the 18/2/2021 and is an effective pattern when conjoined with other indicators

Bullish Technical Analysis:
--> MACD is still bullish but is also a well known lagging indicator and therefore can be misleading
--> Increased buy volume can show a positive outlook on LYC's future due to news about increased demand

From a Fundamental Standpoint:
Bullish Fundamental analysis:
--> Minor competitors for market share: Apart from China LYC is the only producer of rare earth resources
--> Growing tensions with China can bring increased demand to LYC
--> American military suppliers such as Lockheed have been showing increased interest for LYC.
--> American US defense invested 30mil for LYC to build a facility within Texas. This is evidence for the deep interest for the business.

Bearish Fundamental Analysis:
--> Unknown whether LYC can handle an overwhelming amount of demand. Are they prepared for a potential influx of interest?

Overall I have come to a simple conclusion. From a short term perspective it LYC is bearish and is due to a minor downturn (2-10%) however within the long run it is evident that if LYC plays its cards right is has a bright future ahead of it. I am leaving my investment strategy as neutral as I would expect a turn either way however I am intrigued to see whether Fundamentals beat Technical analysis.

Any thoughts on this will be greatly appreciated :)

2021年2月19日

註釋

On Weekly timeframe a drawn fib retracement from highs in 2011 to lows in 2015 shows a future resistance point at $6.51 or @ 0.326 level. This can mean either of two things.

1. With enough bullish momentum such as maintained buy volumes it will break this level and maintain a steady upward way.

2. May weakly meet this level, be unable to break it and then retrace downwards.

This now places 6.51 as a interesting price level and i am intrigued to see what happens.