Yancoal is a $7.7 billion Australian coal miner providing both thermal and coking coal.
“Like most coal stocks, YAL shares have been trending higher since the start of the year,” Michael said.
“However, it has struggled to make any further progress since May,” he added.
“Despite this, we’re seeing some bullish signs on the chart. The fact that it has tried to push through resistance on four occasions is a positive sign (circled on chart).
“It is a misconception that the more a stock tests a line of support or resistance, the stronger it becomes. The opposite is actually true. The more a stock tests resistance, the weaker that resistance becomes. This means that a higher close from here would be a ‘breakout’ and we would treat that as a buying opportunity.
”Any breakout is likely to lead to a strong rally because YAL has been consolidating for a few months now,” Michael said.
Source: Fairmount Equities under the YAL chart (Hot Stock)
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