POSCO's Chart Is Just as Strong as Its Steel

 | Jul 28, 2016 | 11:55 AM EDT
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POSCO ADR  (PKX) is another steel company with a positive looking chart and indicators (see our recent comments on X, AKS and NUE). The rally in steel names is starting to look impressive around the globe. 

In this daily chart of PKX, above, we can see a base in the August-December period, followed by a brief new low in January 2016. Prices quickly turned higher and closed over the 50-day simple moving average line and the 200-day line in February. Prices are now above both of these rising moving average lines. The daily On-Balance-Volume (OBV) line has been moving up, confirming the rally since January. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in a bullish configuration. Going back to old concepts like support and resistance, we can see a rally from $32 to $54, and then a pullback to around $42 (new support), which is the prior top (former resistance) from the August-February time period. 

In this weekly chart of PKX, above, we can see how PKX first broke above the declining 40-week moving average line. The 40-week average then turned up, and we see PKX pull back to retest the 40-week average before turning up once again. The OBV line on a weekly time frame rose along with prices and has since leveled off. The MACD oscillator is above the zero line with a new go long signal. All this sounds positive, and it is. A weekly close above $55 for PKX should give us a set up for a longer-term move to $80. A decline below $45 would change my outlook.

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