John: The Gold Bullion Development (GBB, TSX-V) chart is indeed a picture of beauty, especially after Friday’s trading action. Gold Bullion opened at 68 cents Friday, traded to a low of 67 cents and then climbed to 71 cents. It was able to close at 71 cents, its high of the day, for a gain of 2 pennies on CDNX volume of 874,000 shares. GBB has advanced for 4 consecutive weeks and its market cap is now at an all-time high, breaking through the psychologically important $100 million mark.
Looking at the 6-month daily chart we see that on Friday the price broke out from an ascending triangle to the upside. This is very significant because the top of the triangle at 69 cents had held since November 9.
I have shown 2 levels of resistance (blue horizontal lines) at 71 cents and 79 cents, respectively, but I doubt if the resistance at these levels is going to be very intense. The move up in September to 79 cents was driven by momentum and a lack of sellers. It proved to be unsustainable when the sellers came out in droves during the next couple of days. This time is different – a solid base has been formed with increasing lows on average level volume. The price has moved above the EMA(20) moving average which is pointing up and providing bullish support.
A set of Fibonacci levels is shown with the next Fibonacci target level at 97 cents (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci target based on technical analysis as a guide for investors). Also note the 61.8% retracement level was at 68 cents which also contributed toward resistance at 69 cents.
Looking at the indicators:
The RSI is at 64% and pointing up with a lot of room to move higher before becoming overbought – very bullish.
The ADX trend indicator has the +DI (green line) pointing up at 28 and above the -DI (red line) at 13. The ADX (black line) is flat and steady. This is a very bullish orientation showing a steady bullish uptrend coming out of an ascending triangle.
The Chaikin Money Flow (CMF) indicator is in the green and shows that the buying pressure has been increasing every session since Nov. 9 – very bullish.
Outlook: There is every indication that Gold Bullion could accelerate to the upside in the near future. The GBB chart is undeniably bullish and I expect an increase in volume near-term as well.
Note: The writer holds a position in Gold Bullion Development.
Hey jon, can we still expect a radio interview with Frank soon?
Comment by jeff — December 6, 2010 @ 12:55 pm
Yes, Jeff, this month for sure. Just don’t know the exact date yet, but guaranteed.
Comment by Jon - BMR — December 6, 2010 @ 1:06 pm