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Regular BMR readers know we are very optimistic about the prospects for Seafield Resources (SFF, TSX-V) as it continues to develop its Quinchia Gold Project in Colombia.  The stock has traded within a narrow range of 15.5 to 18 cents since early last month, a pattern that could continue for a little longer until developments on the ground accelerate.  Patience is the key here.  Seafield has a highly prospective land package and an excellent chance of eventually outlining a multi-million ounce deposit at Quinchia (low grade, high tonnage).  The fundamentals are very sound with this company.  The final 4 months of 2010 could be “turnaround time” for Seafield as results start to flow in from Miraflores, Dos Quebradas and Chuscal – the company’s 3 flagship properties at Quinchia, just a short distance from Medoro’s (MRS, TSX-V) 10 million ounce Marmato Deposit.  Today, BMR’s technical analyst updates Seafield from a chart perspective and sees some things he likes:

John: On Friday, Seafield traded in a very narrow range between 16 and 16.5 cents.  It opened and closed at 16.5 cents on CDNX volume of 268,000 shares – it’s highest volume since August 5.  Like many other juniors, Seafield is waiting for assay results as it continues to drill its Miraflores property in the Quinchia District of Columbia.  Initial assays are now expected sometime next month.

Looking at the 6-month daily chart we see that SFF has been trading in a horizontal trend channel since July 8 between 15.5 and 18 cents.   This has been a consolidation period where buyers have been scooping up weak shares.  If there had been a lot of sellers and few buyers the stock would have fallen significantly below 15.5 cents.   This has provided strong support.

During this past week there has been a change in the trading pattern. There were white candles on Wednesday and Thursday, indicating buying pressure, and then on Friday the trading formed a “Dragonfly Doji”. This is very significant in that this candle has bullish implications. Its shadow shows that the market fell during the session but buying pressure pushed the price back up to close at the high for the day – not only that but at the close the asking price rose to 17 cents.  The horizontal trend channel is shown with the top line (blue) denoting resistance and the lower line (green) indicating support. The next major resistance after 18 cents is at 22 cents (see the blue horizontal line).

Looking at the indicators:

We see the RSI is flat just below the bullish 50% level. The bullishness of the last 3 days is not reflected here yet as the period of the RSI is 14 days.

The increase in buying power is reflected even more in the Chaikin Money Flow Indicator where the brown negative bars (below zero) started to get shorter on August 16 and then finished at  +0.107 (green) on Friday.  This is very bullish.

The Slow Stochastics shows the %K (black line) crossed over the % D (red line) below 20% and both are climbing.  This is also very bullish.

Outlook: I expect Seafield to challenge the 18 cents resistance level this coming week.  This stock has a strong base.  With improving technicals and sound fundamentals (good cash position, lots of drilling and exploration, and an excellent project in Quinchia), Seafield appears poised for a strong finish to the year.