Figure 1: Daily chart of Bema Gold.
The daily chart of Bema Gold shows an 8-month descending triangle with diminished volume on the creation of the pattern. Although these patterns have a bearish tendency, I cannot ignore the large volume breakout and the distinctness of the tops and bottoms. There has been a temporary change in direction from up to down with the breaking of the third fan line. This temporary situation presents the opportunity to buy a long position on the throwback. A strong breakout on higher volume confirmed the pattern.
|Figure 2: Weekly chart of Bema Gold.|
|Graphic provided by: SuperCharts.|
|On the weekly chart the medium-term trendline support is in the $1.15 CDN area. Keep in mind I've illustrated the Canadian chart. This is a duo-listed equity in New York and Toronto. The US chart looks identical to the Canadian chart. They trade under the BGO symbol on both exchanges. The current US price is $1.04.|
|Buying a long position in the cradle in the $1.04 US or $1.55 CDN. is as safe an investment as there is in the market place currently. Anticipating gold prices to move higher towards the $400.00 area after the current throwback to the $330.00 US will make this happen.|
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