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John: On Friday, Abcourt Mines (ABI, TSX-V) opened at 20.5 cents, its high, then dropped and closed at its low of 19 cents. It lost 1.5 cents on the day (-7.32%) on CDNX volume of 423,000 shares. For the week it was even on volume of 1.8 million shares.

Looking at the 2-year, 4-month weekly chart, we see that in October and November, 2009, ABI topped out.  Over a 7-month period the stock then declined from the high of 22 cents to an intra-week low of 7 cents.   In July, 2010, a bullish reversal started and ABI climbed to a high of 18.5 cents at the end of October.  Then it proceeded to retrace to a low of 10.5 cents in December.  Within a week it reversed again to the upside and in 4 weeks ABI climbed to an intra-week high of 23 cents.   Then for the next 7 weeks until now there has been consolidation between a low of 15.5 cents and a high of 22 cents.   Effectively, by using weekly closing levels only, we can consider this a horizontal trend channel between 16 cents (green support horizontal line) and 20 cents (blue resistance horizontal line).  This consolidation is validated by the gradual declining volume.

There are two blue Fibonacci sets shown. The right hand one has a seed wave between 9 cents (0%) and 18 cents (100%) showing a target of 23 cents.   Note that this was the high on January 11, so this initial Fibonacci target was reached. The left hand set shows the next target is at the 32 cent level (we caution that this is not a BMR price target as we don’t give price targets but a potential and theoretical Fibonacci level based on technical analysis). The 23 cent level is a previous high, thus it will be a resistance level to future upward moves after a breakout above 20 cents.   There is strong support at the channel at 16 cents.   

Looking at the indicators:

The RSI is flat at 59% and waiting for a breakout from the channel – bullish.

The Chaikin Money Flow (CMF) indicator at -0.006 shows the buying and selling pressures are about even. This is to be expected during a consolidation.

The ADX trend indicator has the +DI (green line) at 26 above the -DI (red line) at 15. The ADX (black line) trend strength indicator is at 22 and slowly rising. This indicator shows the long-term trend is bullish.

Outlook: ABI is trading in a consolidation channel and appears to be waiting for news before a possible breakout to the upside.

Note:  The writer holds a position in Abourt Mines.