John: On Friday, Gold Bullion Development (GBB, TSX-V) opened at 80 cents and got as high as 81 cents before drifting lower and closing at 79 cents, down a penny on relatively light volume of 360,000 shares on the CDNX. Looking at the 3-month daily chart below, we see that the stock has found strong technical support.
After reaching an all-time high of 93 cents on December 20, GBB has consolidated within a downsloping flag. The price has found support at the Fibonacci level band between 76 cents and 79 cents as indicated by the green dotted lines. It’s also closely supported by the EMA(20) which presently stands at 78.9 cents and a rising 50-day SMA which is currently at 72 cents. The consolidation within the downsloping flag is validated by the declining average daily volume. The short-term Fibonacci target levels remain intact at 97 cents and $1.08 (these are not BMR price targets as we don’t give price targets but theoretical Fibonacci levels based on technical analysis).
Looking at the indicators:
The RSI has declined to the 53% level and thus has unwound the previous overbought condition. The RSI trend line has been drawn (orange line) and when broken to the upside will indicate a potentially very bullish price move. At present the 50% level is providing strong support.
The Slow Stochastics %K (black line) is flat at the 44% level and below the %D (red line) at 48%. A previous SS support level is drawn (green horizontal line).
The Chaikin Money Flow (CMF) indicator has declined but maintained a bullish level of buying power during the consolidation.
Outlook: GBB is simply waiting for news. There has been a consolidation, not a sell-off, thus it has found strong support as described above. This stock provides great potential for patient investors.
Note: The writer does not currently hold a position in GBB.
Will you cover GBB & CQX more than usual all week or what is the plan? And about GBB’s current drilling, are there any dates we are expecting results? Or at least which month could we be getting next sets of results from them? – J.C.
Comment by J.C. — January 10, 2011 @ 4:00 am
Yes, we’ll have more coverage on GBB and CQX this week and a lot throughout the month. Your guess is as good as mine with regard to when GBB will be releasing its next results. Anytime this month is probably as good a guess as any. The news was consistently good regarding Granada throughout last year. We expect that trend to continue.
Comment by Jon - BMR — January 10, 2011 @ 4:55 am