John: On Friday, Currie Rose Resources (CUI, TSX-V) opened at 38 cents, rose to a high of 41 cents, drifted lower to 37 cents and then closed at 37.5 cents for a loss of 1 penny on CDNX volume of 740,000 shares.
Looking at the very bullish 6-month daily chart above, we see that on December 7 Currie Rose reached a new 52-week high of 47.5 cents. The candles on Dec. 6, 7 and 8 formed an “evening star” pattern which suggested an imminent reversal. Consequently the price fell to support at 37 cents, a healthy minor correction that helps set the stage for the next potential major advance. The price Dec. 6/7 had risen too far above the supporting EMA-20 (exponential moving average) and was unsustainable at the time. There is also a divergence between price and the RSI which reflects this situation. This divergence, however, is positive in that it is effectively unwinding the overbought condition.
Two sets of Fibonacci levels are shown. The black set shows the target was 46 cents and this acted as resistance to the last move up. The blue set shows the next target level is at 67 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). The volume, probably our favorite indicator, shows that it is less on down days which is bullish as this indicates consolidation and not a sell-off.
Looking at the indicators:
The RSI has unwound from the overbought condition to a support level at 60% and should fall no further – very bullish.
The Chaikin Money Flow (CMF) indicator shows falling buying pressure during the last 3 days which is to be expected during a consolidation – bullish.
The ADX trend indicator has the +DI (green line) at 39 and above the -DI (red line) at 19. The ADX (black line) trend strength indicator is weakening slightly at 59 which is to be expected – a very bullish scenario.
Outlook: Currie Rose is experiencing a minor consolidation to complete the unwinding of an overbought condition. It is trading at support and should start making another move up toward the next Fibonacci target. The technical outlook for CUI remains very bullish.
