John: On Friday, Seafield Resources (SFF, TSX-V) opened at 24.5 cents, drifted to a low of 23.5 cents, rose to a high of 25.5 cents and then closed at 25 cents with 1.9 million CDNX shares traded for a half cent gain on the day. The company has consistently stated that initial drill results from its Miraflores property in the Quinchia District in Colombia are expected by the end of September, which now means next week. The increased volume Friday indicates we may indeed get news next week. BMR is very bullish on Seafield’s Quinchia property package which includes Miraflores, Dos Quebradas and Chuscal.
On September 6 we presented an update on SFF. I stated at that time: “I expect in the near future Seafield will finally overcome resistance at 22 cents and take a run to the next resistance area around 30 cents. The stock is a lot tighter now and drill results are expected sometime this month.”
Looking at the 6-month daily chart we see that the stock has not only overcome the resistance at 22 cents but has climbed as high as 26.5 cents at which point it started to decline and form a handle (downsloping blue lines) to the cup (mauve lines). Last Thursday SFF broke above the handle and continued up on Friday. There are two sets of Fibonacci levels shown. The blue set has 0% base at 16 cents and the top of the Seed Wave is the 100% level at 24 cents. The 161.8% level or the next Fibonacci target is shown at 29 cents. The green Fibonacci set using a 16 cent base and 29 cents as the 100% level shows that after the 29 cent level has been reached the next target is at 38 cents, just above its 2010 high of 35.5 cents. The chart also shows there is a resistance level around 30 cents (horizontal blue line). This 30 cent resistance level and the 29 cent Fibonacci target create a resistance band at 29-30 cents. Just a brief word here. When I show a resistance level, band or target I do not mean to imply that the stock price must stop there. These points create an awareness for the investor that there is a higher probability that at those levels the stock price will at least hesitate or pause. In order for the price to break the resistance at the top of the handle at 26 cents we need the high volume levels to continue.
Looking at the indicators:
The RSI has turned up and is below the overbought area – bullish.
The Slow Stochastics shows that the %K (black line) has crossed above the %D (red line) and is pointing up and is still neutral – bullish.
The Chaikin Money Flow (CMF) indicator has started to climb in the last 2 trading sessions after declining during the formation of the handle. This shows an increase in buying pressure. Note the CMF was in the green even when the handle was being formed – very bullish.
Outlook: With the increase in price in the last 2 days, the relatively high volume on Friday and the increased buying pressure we could easily see a good move with SFF during the coming week especially with the possibility of some Miraflores drill results and an overall exploration update from Quinchia. All the ducks appear to be lined up.
There is a selling lot at 26 cents and is not easy to pass through this line.
Comment by Theodore — September 26, 2010 @ 7:36 am