John: On Friday, GoldQuest Mining (GQC, TSX-V) gapped up at the open from Thursday’s close of 42.5 cents to 45.5 cents. It rose to a high of 48 cents before closing at its low of 45 cents for a gain of 2.5 cents (5.88%) on CDNX volume of 677,000 shares. This is a very bullish chart with a confirmed breakout.
Looking at the 6-month daily chart, we see that through December and January the price met strong resistance at the 40 cent level. On Jan. 25 there was an apparent breakout to the upside but this failed the following day (a bull fake) and the price declined to the close supporting SMA(50). On February 1 it bounced up and this strength has continued over the last 3 sessions. The previous resistance at 40 cents is now strong support (green horizontal line).
The volume on Friday was more than double Thursday’s (the number of individual trades Friday increased dramatically to 197, the highest single day total in over 2 months). Thursday’s trading was significant in that it was a breakout to the upside from the 40 cent resistance and Friday’s bullish move with the increased volume was confirmation this breakout is for real.
The first Fibonacci set (blue) has the seed wave from a base of 11 cents and the 100% at 33 cents. It projected a target of 47 cents, the level at which the price met resistance on Friday. The green Fibonacci set projects the next target to be at 69 cents (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis).
Looking at the indicators:
The RSI has shown a strong move up from a “W” formation and is at 66% – very bullish.
The Chaikin Money Flow (CMF) indicator shows the buying pressure has been bullish for the last 12 sessions. This supports the price breakout – very bullish.
The ADX trend indicator has the +DI (green line) climbing strongly at 33. It’s above the -DI (red line) which is at 17 and pointing down. The ADX (black line) trend strength indicator has turned up at 17 – a very bullish orientation.
Outlook: The confirmed breakout and the indicators all point to continued strength in GoldQuest in the days and weeks ahead. This one will be interesting to watch.
Note: The writer holds a position in GoldQuest Mining.
BMR did such a good job of bringing GoldQuest to the markets attention that it certainly played a part in generating a great looking technical picture. Like it a lot. Have asked management for some additional information prior to taking a plunge.
Appreciate the work you all do here.
Comment by george wohanka — February 6, 2011 @ 6:02 pm