Greencastle Resources (VGN, TSX-V) has experienced 3 powerful moves – very sharp spikes – over the last 7 years (late 2003, early 2006 and mid-2008). The 2006 surge was more intense than 2003, and the 2008 explosion from 13 cents to 60 cents in just 18 trading sessions was stronger than 2006. We’re certain that a very powerful fourth move is now underway, which could be longer lasting and even more spectacular than the previous 3, driven by Greencastle’s recent shift in corporate strategy to get much more active in the Gold exploration space. This is a company with 3 quality Gold projects and possibly more on the way, monthly cash flow of at least $125,000 from an oil royalty valued at $5.2 million by an independent engineering firm last December, and $6 million in working capital with not a penny of debt – and it’s trading at a paltry market cap of just $8.3 million based on Friday’s closing price of 18.5 cents. The huge volume increase in VGN at the end of last week suggests its fourth BIG move in the last 7 years is now underway. BMR’s technical analyst reviews Greencastle’s chart to determine what we might expect in the immediate future:
John: On Friday, Greencastle Resources (VGN, TSX-V) opened at 18.5 cents, drifted down to its low for the day of 18 cents, climbed to a high of 19.5 cents and then closed at 18.5 cents for a gain of 1.5 cents on CDNX volume of 1 million shares.
Looking at the 15 month weekly chart, we see that starting in August, 2009, VGN began a slow climb that took it to a high of 19.5 cents in January, 2010. From there the trading pattern that formed is a “Cup with Handle” (mauve lines), the handle shown as downsloping blue and green lines (note the charting software does not show 3 significant figures, thus the high of 20 cents is really 19.5 cents. The low for the cup is 11.5 cents). We also can see that the right hand side of the Cup reached a high of 18 cents and retraced down to the 14 cent level. Last week saw the breakout from the handle to end the week at the 19.5 cent level, the same as the left hand side of the cup. This is at the resistance level denoted by the horizontal blue line.
There are two sets of near-term Fibonacci levels shown. The initial set in green shows the first target is 26 cents. The second set in blue indicates the second target is 35 cents. Over the week a relatively huge 1.7 million VGN shares were traded, 1 million on Friday alone.
Looking at the Indicators:
The RSI is at the 66% level, not overbought, and notice the RSI bounced off the 50% level when the breakout from the handle occurred – very bullish.
The Chaikin Money Flow (CMF) indicator shows that last week’s buying pressure increased to offset the CMF selling pressure and reduced the previous week’s level from -0.40 to -0.067 – very bullish.
The ADX trend indicator has the +DI (green line) at 34, pointing up and above the -DI (red line) which is at 11 and pointing down – a bullish orientation. Notice the +DI crossed up over the -DI in the second week of September to start the bullish trend. The ADX (black line) trend strength indicator is at the 21 level and rising, indicating a strengthening bullish trend.
Outlook: With the breakout from the handle the next objective is for the price to break above the 20 cent level on its way to the first target of 26 cents in the near future. This is entirely possible if the volume remains high. This stock has a history of quick, explosive moves.
