Richfield Ventures (RVC, TSX-V), developing a potential world class gold deposit with its Blackwater Project in central British Columbia, was added to the BMR Portfolio last December at $1.20. It nearly doubled in price by March, hitting an all-time high of $2.25, before a severe correction set in that drove it to a low of 87 cents June 30. Today Richfield closed at $1.57, an 80% jump from the low just 5 weeks ago. Tonight, BMR’s technical analyst examines the near-term outlook for Richfield which has not had a “down day” for 10 consecutive trading sessions:
John: Today, Richfield Ventures (RVC, TSX-V) opened at $1.53, dropped only a penny lower $1.52, and closed at $1.57 for a 4-cent increase from yesterday.
Looking at the 6-month daily chart (ending Aug. 4), we see that for the last 7 sessions RVC has traded between a support band and a resistance band. For the past few days the volume has been relatively high but the stock has not been able to overcome the resistance.
The candle Wednesday was a “spinning top”, a candle with a small real body and a small upper shadow and a long lower shadow. This shows that the bulls and the bears are battling it out with neither one being able to take a dominant position. The buying pressure is there but the bears counter-attack.
RVC is trading above both its SMA(50) and its SMA(200), both of which have turned to the upside. This is a bullish sign.
Looking at the indicators:
The RSI is high in the overbought region at 83%, indicating a consolidation is required for this to move higher.
The Slow Stochastics is just entering the overbought area and has room to move up before reaching an extreme position.
The ADX trend indicator shows the +DI (green line) is above the -DI (red line) and has peaked at 40 which is rather high and now falling. The ADX trend strength line (black) has become flat, indicating the bullish trend is weakening. Note that the +DI peaked before the ADX line – this is to be expected.
Outlook: RVC is trading between a strong resistance band and a strong support band and is required to unwind its overbought condition before it can move up. We will see this stock consolidate for at least the near term and then possibly move higher because it is still in a bullish trend. Be patient. Let the bulls and bears fight it out.