Is Any Exciting Opportunity Brewing Up For Noxopharm Limited – A Technical View!

In the last three months, Noxopharm Limited (ASX: NOX), which is involved in the manufacturing of drugs used for cancer treatments, has witnessed a stock price fall of over 19%, as at March 01, 2019. The company is headed by Mr Graham Kelly who is the present managing director and CEO of the company; and was listed on the ASX in 2016 and since then the stock has given about 130% return to the investors. This return was boosted by the astonishing level that the stock reached, i.e., its all-time high at A$1.58 in December 2017 from where it has fallen more than 75% and is trading around A$0.425.

In the past couple of months, the stock price has been seen to be trading in a very tight range of A$0.36 – A$0.47 after falling continuously from the peak of A$0.75 odd levels. This consolidation phase after a continuous fall is indicating that the stock is being accumulated in a decent quantity (clearly surpassing the supply of the stock) which has prevented the price from falling further from making new lows. The downtrend has been halted by huge demand out of which a significant portion of the participation is by the management of the company itself. On February 14, 2019, the company informed that Mr Graham Kelly has lately acquired 65,553 ordinary shares. This kind of heavy buying from the insiders also reflected the confidence of the management on the stock.

Daily Chart as at February 28, 2019 (Source: Thomson Reuters)Daily Chart as at February 28, 2019 (Source: Thomson Reuters)

Relative Strength Index (RSI) which shows the relative strength of the security compared to the previous number of days is also turning up from the lower levels (depicting an increase in the strength) and is currently trading above three months high. Also, there is 9-month bullish divergence seen on the bottom level from where the price is turning on the upside. A bullish divergence is seen when the RSI falls with the price, but on the next fall the price falls below the previously made low, however the RSI (or any other respective indicator) fails to break its low and moves on the upside. This bullish divergence paired with the share accumulation by the management of the company is painting an improved picture for the stock from here.

As far as the price trend is concerned, it is yet to turn positive while the 2 months’ long accumulation phase after the downtrend has turned the scenario from negative to neutral side (as long as the stock is trading as per the above-mentioned trend), which is generally the initial sign of a potential positive trend. Currently, there is a resistance of around A$0.47 from where the stock is facing selling pressure. A breakout above this resistance level with volume might change the trend from neutral to positive and may take the stock to further high levels till the next resistance level of A$0.55. The view for positive trend will get negated if the stock breaks below the lower end of the range, i.e. A$0.36. As of March 01, 2019, the stock closed the trading session at A$0.425.

The group is yet to report healthy financial results while the latest half year report for period ending December 2018 indicated for narrowing of loss after tax by 62.9% and the group is also intending to advance its Veyonda® Clinical Program going forward.


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