ThinkTechnical 2 July


A topical look at technical analysis factors for a number of key markets, and ASX stocks of interest.



The theme for today's ThinkTechnical is 'Gold Stocks'.

The gold sector has been a stellar outperformer of late, and some stocks within the sector have seen similar strong gains.

Today, we will investigate the main driver for the sector, the price of gold itself, and look at 3 key stocks which are well placed to take advantage of gold's likely continued strength.
 
 

Gold

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We'll kick off with some analysis of the gold chart itself. The uptrend in gold is well defined, both in the short term via rising 21-34 EMAs, and in the long term via rising 144-233 EMAs. Each of these indicator bands demonstrates steady and considered accumulation.

The price however clearly needs to deal with static resistance from the October 2012 high of $1795.69, which appears in the short term to be dominating sentiment. It may take one or two tests of this level to be really clear of it. The question is, whether the last 2 bars represent the first test - and it is probably a case of 'close enough'.

Either way, gold will need to close above $1795.69 to facilitate a faster increase to the next major static resistance level of the September 2011 high of $1920.30.

Static support will be found around the 18 May high of $1764.55, and lower still, to the 5 June low of $1670.14.

In addition to dynamic support from the short term moving averages, the broader consolidation zone commenced when 14 April's high of $1746.50 was set, should also hold up prices. The gold picture remains bullish whilst price can stay in or above these levels.

 

Saracen Mineral Holdings (SAR)

2020-07-02_SAR.png


SAR is also in a clearly defined short term and a clearly defined long term uptrend, as evidenced by rising 21-34 EMAs and 144-233 EMAs respectively.

In the short term, it will have to deal with supply produced by static resistance at the 19 May high of $5.69. It may take a further one or two tests of this level before SAR may break decisively above it, allowing prices to once again move rapidly to the upside.

Some consolidation around the 19 May static resistance is preferred from a trading standpoint, as it will allow the dynamic support zone defined by the short term moving averages to catch up to the current price. This will allow for the placement of closer stops, and therefore better reward to risk on any potential long trades.

Downside moves into the dynamic support zone should continue to be looked at as buying opportunities. Prices will also be well supported by static support from the 28 April high of $4.73, and the 6 August 2019 high of $4.66.
 
 

Bellevue Gold (BGL)

2020-07-02_BGL.png

Despite the sharp pullback from the 25 June high of $1.225, BGL remains in a short term uptrend, as evidenced by the rising 21-34 EMAs, and a long term uptrend, as evidenced by the rising 144-233 EMAs.

Pullbacks such as these are healthy reactions to the trend. No trend moves in a straight line. The question then becomes, when to re-enter? The short term moving averages are typically the best guide here - as they define a zone of likely dynamic support.

Better still, by entering in the dynamic support zone, stops can be set tight, allowing for improved reward to risk. The dynamic support zone is reinforced by static support from the 1 June high of $0.945.

Long trades may target $1.225 as a first stop, but past this there are no further major static resistance points until the July 2011 all-time high of $3.40.
 
 

Regis Resources (RRL)

2020-07-02_RRL.png

The short term uptrend for RRL is clearly defined by rising 21-34 EMAs. In a very positive sign, the longer term trend as evidenced by a crossover in the 144-233 EMAs has recommenced.

The 18 May high of $5.61 clearly dominates short term price action, and a significant flag pattern has developed since then. Importantly, RRL has tested this static supply level once already (on 2 June), and is approaching a second test. The more tests, the more likely supply will be overcome, and that prices may move higher again.

A breach of $5.61 should see a move to the 23 July 2019 high of $6.72.

The June low of $4.89 offers static support, and with the dynamic support from the short term EMAs nearby at $5.10-$5.20, a stop on a long trade can be set under these levels with confidence.



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