Potash Stock: 4 Technical Levels to Watch Around Earnings

by Serge Berger | October 21, 2013 9:31 am

Potash Corporation of Saskatchewan (POT[1]) — the famed producer of potash, phosphate and nitrogen — is scheduled to report earnings Thursday before the bell. Potash stock has a tendency to move quite dramatically after earnings, so let’s map out some reference levels we can trade against after the report (once emotions have settled a little).

Potash stock tends to react well to various technical support/resistance areas as well as technical formations — that is, when POT doesn’t gap up or down in a major way after an earnings announcement.

Since August 2009, POT has showed great support around the $28 area, which most recently was once again tested in August, the first time since July 2010. Thus, this is the first area of reference to focus on bigger-picture in case shares melt down after Potash earnings.

On the upside, a major resistance line that has been in place since June 2012, and acted as support until July of this year, is around the $37 area. If Potash stock moves above there, it would show great strength.

pot multi year
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On the closer-up daily chart, my No. 1 level to focus on is the $33 mark, which if broken to the upside would result in a little resistance line from the September highs to break. Depending on the strength of a potential break past $33, POT could easily start working into the big, empty space above the September highs, which ranges from around $33.80 up to at least $36.

On the downside, immediate term support sits around the $31.10 area, which also coincides with the stock’s 50-day simple moving average (yellow line). A break below there could easily move Potash stock toward the $28 area for another test of the long-term support line — and depending on the selloff’s force, might even push the stock below there.

pot daily
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So there they are: four important levels to focus on once Potash reports earnings this Thursday.

Serge Berger is the head trader and investment strategist for The Steady Trader[2]. Sign up for his free Weekly Market Outlook Video here[3]. As of this writing, he did not hold a position in any of the aforementioned securities.

  1. POT: http://studio-5.financialcontent.com/investplace/quote?Symbol=POT
  2. The Steady Trader: http://thesteadytrader.com/
  3. free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47

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