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The last few months have been relatively uneventful for Currie Rose Resources (CUI, TSX-V) but that could soon change based on fundamental factors and strong clues that John has picked up in Currie Rose’s chart patterns.

The rainy season in northwest Tanzania, typically from December through April, puts a halt to drilling activity but May is just around the corner and that’s when we expect Currie Rose to aggressively begin exploration at its highly prospective Sekenke Project which runs in between and surrounds two former high grade Gold mines.  We’ve written about Sekenke before and we’ll revisit it again in the days ahead – it’s a superb target at the southeastern end of the Lake Victoria Greenstone Belt, about 200 kilometres from Currie Rose’s Mabale Hills Property.

From a technical perspective, John has closely examined the CUI chart and has come to quite a bullish conclusion based on several factors including a “cup with handle” pattern that has just been completed.  As of 9:40 am Pacific, at the time of this posting, CUI is off half a penny at 16.5 cents.

John: Yesterday, Currie Rose Resources (CUI, TSX-V) opened at 16 cents, its low, and then closed at its high of 17 cents on low CDNX volume of 65,000 shares for a gain of 1 penny (6.25%). We will analyze CUI this morning using 2 charts. Chart #1 is a weekly chart to view the big picture and Chart #2 is a daily chart covering the last 4 months of trading in more detail.

CUI Chart #1

Looking at Chart #1, a 27-month weekly chart, we see that after more than 18 months of consolidation, primarily between a low of 2.5 cents and a high of 8.5 cents, a move up began from 3.5 cents at the end of July, 2010.   The share price formed a flagpole from July of last year until December and reached a momentum high of 47.5 cents.   From that time it retraced down to the Fibonacci 38.2% level (16 cents).  From early January of this year it has been in consolidation, validated by declining volume. The chart also shows a bullish crossover of the weekly SMA (50) up over the weekly SMA (200) with both providing close support at 15.5 cents and 14.8 cents, respectively.

Looking at the weekly indicators:

The RSI has completely unwound from being overbought and is now in a strong support band between 40% and 47% – bullish

The Slow Stochastics (SS) has the %K at 23%, pointing up, and above the %D at 14% – bullish.

The Chaikin Money Flow (CMF) indicator shows an increase in selling pressure during the past 2 weeks. As we will see on Chart #2 this is due to the formation of the “handle”.

Now we turn to Chart #2 to take a detailed look at daily trading during the last 4 months.

CUI Chart #2

Looking at this chart we see a “cup with handle” pattern (mauve outline of cup) completely formed with a completed downsloping “handle” which is also a “flag”. We also see a “double bottom” support pattern at 13.5 cents which is very strong support.

It is important to note that the “handle” has only retraced from the top of the right hand side of the cup down to the Fibonacci 38.2% (16 cent) level. The Fibonacci levels are not shown due to space restrictions. The important point here is that if the “handle” had retraced further it would have invalidated the complete “cup with handle” pattern. This pattern is now complete. A resistance level has been shown at 20 cents.

There are two daily moving averages shown, SMA (50) and SMA (200).  Both are at 17 cents, the present trading level.

Looking at the daily indicators:

The RSI at 51% has formed a flat “W” formation – bullish

The Slow Stochastics (SS) has the %K at 45%, looking ready to cross up over the %D at 46% – bullish.

The Chaikin Money Flow (CMF) indicator shows that the buying pressure has declined during ths past 6 sessions during the formation of the “handle” as expected – bullish.

Outlook: The charts indicate that the bullish “cup with handle” pattern is complete and the stock appears ready for a breakout from the “handle” in the near future. For this breakout to be sustainable there must be a large increase in volume.

Note:  John does not currently hold a position in Currie Rose Resources (Jon does).