Pattern Play: Golden Star Resources

Bullish trendline breakout and bullish MACD crossover.

Gold 4

Golden Star Resources (GSS), a Canadian-based gold mining and exploration company, broke to the upside of a falling wedge pattern on Monday, September 14th. On September 16th, the MACD line crossed above the signal line, a bullish indicator. It appears that the majority of gold mining companies are showing similar patterns, which shows traders that there is positive sentiment in the precious metals sector. This is likely the result of U.S. markets showing signs of weakness in the past two weeks, as gold is viewed as a safe haven during poor market conditions. 

Given the spinning top candle sticks in the last two days of trading, price action could be hinting that the breakout is stalling and bound for a throwback. Price will likely retrace to the upper trendline where is will probably find support and bounce to retest the 2020 high of 5.20. If 5.20 is penetrated, then price will likely grind higher to the 5.65 resistance level, a high last reached in mid-2016. If price ends up closing below the upper trendline it would be a troubling sign that could indicate that the pattern breakout was false. If that occurs price could slip back to the 4.20 support level, where a rebound may occur, but is less likely. If price breaks below the 4.20 support level it could slip further to 3.60.      

Source: GAIN Capital, TradingView

More from Technical Analysis

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account