Is This Exploration Co. Ready To Break Out?
Contributed Opinion

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Having completed a large base pattern that has formed since late last year, Atlas Salt Inc. (SALT:TSXV; REMRF:OTC; 9D00:FSE) is looking very ready to break out into a new bull market.

Atlas Salt has a positive fundamental story but for time reasons we will not look at that today and will concentrate on the charts.

On its 5-year chart, we can see how the large base pattern formed following a long banana-shaped bear market downtrend from its highs in 2022, when it peaked briefly at CA$4.50. It finally hit bottom in July of this year at CA$0.55, but well before the bottom was reached, a base pattern had started to form, as we will now proceed to see on shorter-term charts.

Before moving on from the 5-year chart, observe how the bear market brought the price down to a zone of strong support whose origins can be traced back to the trading in 2021, with downside momentum slowly disappearing as the price stabilized above the support and the light volume over the past year indicating that speculative interest has been completely wrung out by the lack of any serious upside action, which is bullish.

If we now look at Atlas Salt on a 32-month log chart, we see that what appears to be a banana-shaped downtrend on the long-term arithmetic chart becomes an orderly parallel downtrend from late last year on a log chart — and the good news is that the price has already broken out of this downtrend over the past month or two, by virtue of moving sideways, with the current tight bunching of the price and its moving averages showing that the stock now has the potential for a big move.

Also, on this chart, we can see that a Double Bottom has formed, with the first low occurring early in the year and the second low occurring in July, which the price has started to advance away from. Should it break out by breaking above the nearby resistance shown, it will target the next major resistance in the CA$1.30 – CA$1.50 zone.

On the 6-month chart, we can see that the second low of the Double Bottom highlighted on the 32-month chart is comprised of a Cup and Handle base that was formed in late April. Although this Cup and Handle base is rather odd-shaped, it has been accompanied by a volume pattern that is characteristic of such a base, in particular, the strong volume on the rally to form the right side of the Cup.

Also of note on this chart is the continued generally strong upside volume since the price rallied to complete the right side of the Cup, which has driven the On-balance Volume line steadily higher in an uptrend, which is bullish in purport and the current tight bunching of the price and its moving averages, following the 200-day flattening out, such as commonly precedes an upside breakout with the convergence of the MACD fluctuations suggesting that a larger move is likely soon that is expected to be to the upside.

Thus, with all the pieces in place for an upside breakout into a new bull market soon, Atlas Salt is rated an Immediate Strong Buy. 

Atlas Salt's website.

Atlas Salt Inc. (SALT:TSXV; REMRF:OTC; 9D00:FSE) closed for trading at CA$0.68, US$04912 on October 15, 2024.