Liberty Star Uranium Corp likely headed for consolidation

Today LBSR hit a higher high above last Friday’s high price swing but volume contracted dramatically.  This is a short term bearish sign because we tested last Friday’s high and then closed under it.  I also see a bearish candlestick piercing pattern where price retraced 50 percent into last Friday’s candlestick.

There is also a bearish divergence between price and RSI.  In addition to that the price of LBSR has moved to the expected duration after the bullish falling flag formation that occurred at the previous consolidation in the .05 to .06 range.

Don’t get me wrong, LBSR is extremely strong but at sometime this stock needs to take a breather and start to build more sideways cause again.  Today’s action seems to be suggesting that this process may begin now or at the latest sometime this week.

It does appear that LBSR is trying to trade into a news item.  Once the news item is released, there ought to be a classic ‘sell the news’ type situation as is usually the case.

So far LBSR is an outstanding penny stock and a sideways consolidation will be very welcome news as it could make a base suitable for much higher prices ahead.

When a penny stock starts trading up in a straight line it usually seems like it will keep doing so indefinitely.  I have been there before.  But at some point the stock will start a consolidation which can sometimes take several months to build.