Rare Earth Metals: AVL.TO - Potential Setup

If this count is correct, next week should start to see strong gains in this stock.  The wave count + fib levels fit extremely well.  Even Wave 2 and Wave 4 retraced the same amount 38.2% of Wave 1 and Wave 3 respectively.
Wave 4 retraced to 4.98 closing the previous gap.  The very short term which I would consider 1-2 weeks could show a bit of downside, but overall relatively bullish on this.

Conservative trade would be buying a breakout of high in Wave i, setting a stop just below that level.

A more aggressive trade would be buying when the 20 MA is reclaimed which is currently at $7.27.  Setting a stop just below this.

Even more aggressive trade would be Buying at 6.81-6.85 if it gets to there, as if this level breaks the count would be invalid.

I currently hold a small position in this and might look to call options if the price continues to sink on Monday.


Predicted tops for this wave 5:  From http://www.terminusa.com.ar/

The most likely are bold, and current price of AVL is sitting at $7.12.  Therefore, ignoring the lowest since this has already got to 7.53 during this leg up, we can see that $8.01 is the next likely target.  So even if we take the worst case, the upside is 12.5%.   High gain for relatively low risk if bought just above the last break low of 6.83.  With a stop under this or 6.81 (previous break). 

My major caveat to this goes directly against charting as you shouldn't care of the underlying asset when doing an analysis but I look towards geo political events as well as mining activities around the world.  Everyone now is looking for rare earth and as AVL is not a producer yet it isn't capitalizing on the high prices of materials.  So China's export policy is a key issue to the value of this and other rare earth exploration / developers.  Currently supplying 97% of all rare earth materials to the world, China has slashed export quotas along with creating stricter emission standards for rare earth exporters.   These actions led to the dramatic rise in price of mining / exportation / developers of rare earth outside of China.  AVL on the TSX, is Avalon Rare Metals Inc.

There Website front page provides the following information:
"Avalon Rare Metals is a Canadian mineral exploration and development company with a primary focus on the rare metals and minerals, headquartered in Toronto, Ontario, Canada.
Avalon's primary asset is the 100% owned, advanced development stage project, Nechalacho Rare Earth Element Deposit located in the Northwest Territories, Canada.  Avalon believes that Nechalacho is one of the highest quality undeveloped REE deposits in the world, unique in its exceptional enrichment in the heavy rare earths.  Avalon also owns four other rare metals and minerals project in Canada, of which three are at advanced stages of development. "