John: Gold Bullion Development (GBB, TSX-V) opened at 55 cents Friday, drifted down to 54 cents and then strengthened toward the end of the day to close the week at 57 cents (a gain of two pennies on the day) on CDNX volume of 836,000 shares.
Looking at the 6-month daily chart we see that GBB continues to consolidate within a 4-month channel while investors wait for the closing of the company’s financing and fresh drill results from the LONG Bars Zone. This channel has a top line of resistance (blue) and a bottom line of support (green). From mid-September to the present, the trading has formed a small consolidating symmetrical triangle. Also, I have drawn in a pre-breakout consolidating channel with the top resistance line (blue dotted) and the green support line at the bottom. The purpose for drawing in these patterns within the main channel is to allow the investor to get an early awareness of a breakout. Two similar breakouts from this pre-breakout channel are shown. Remember, for a valid breakout the stock must close above the blue dotted line. Since September 12 the average volume has been declining (mauve line) which is normal during consolidations.
Looking at the indicators:
The RSI is at the 48% level and appears poised to get through the 50% level when news arrives, if not sooner.
The Slow Stochastics has the %K (black line) pointing up at 23% and above the %D (red line). This may be forming a “W” formation similar to the one in July so watch this carefully.
The Bollinger band width is still falling but has not reached the low level of the previous breakout so it has room to drop further.
Outlook: GBB is trading almost at the bottom of the main channel so I do not expect it to fall further. The trading pattern obviously indicates investors are waiting for and expecting news in the near future. If the news is good, the stock could move dramatically upward as the top of the trading channel is above 80 cents.
