8:00 am Pacific
John: Yesterday, Adventure Gold (AGE,TSX-V) opened at 56 cents, its low, rose quickly to a high of 63 cents and then closed at 58 cents. It gained 3 pennies (5.45%) on CDNX volume of 594,000 shares. The trading activity in this stock recently has been very interesting. As of 8 o’clock this morning Pacific time, AGE is 3 cents higher at 61 cents.
Looking at the 4 month daily chart, I have presented the Slow Stochastics (SS) behind the price to illustrate how SS crossovers can warn investors of probable reversal points especially in sideways trading situations. At the same time I’ve include another indicator, 4 instead of 3.
We see that between November 8 and February 15 the trading was within a horizontal trend channel (top blue line, bottom green line). Then on Feb. 15 there was a breakout to the upside which took the price from a low of 56 cents to 67 cents and the next day it rose again to an all-time high of 80 cents. From Feb. 16 to now the stock has been in consolidation with the volume declining accordingly.
Yesterday, the up volume increased significantly which is a bullish sign in any consolidation. The base support for this consolidation is strong at 55 cents.
Looking at the indicators: The RSI(5) shows 3 “W” formation in the last 4 months. The ones in Nov. and Feb. occurred just prior to significant breakouts and another has formed during this consolidation. The Feb. overbought condition has been completely unwound and the RSI has bounced up from support at 50%. It now sits at 57% and is pointing up- very bullish.
The Slow Stochastics (SS) shown behind price gives three clear instances where the %K (black line) has crossed above the %D (red line) to provide warnings of imminent or near-term upward price moves. At the present time there appears to be the strong probability of another crossover to the upside with %K at 39% and %D at 40% – very bullish.
The Chaikin Money Flow(CMF) indicator showed strong buying pressure during the breakout. It fell significantly during the consolidation as expected. Presently it’s at a low 0.025.
The ADX trend indicator is in bullish orientation with the +DI (green line) at 30 and above the -DI (red line) at 10. The ADX (black line) trend strength indicator is at 30 and climbing – very bullish.
Outlook: The chart pattern and all the indicators point to the probability of a move to the upside in the very near future.
Note: The writer holds a position in AGE.
