With all the buzz about new stimulus from the European Central Bank, gold has rallied 3.5% to retake $1,300 per oz.
And now that ECB President Mario Draghi has committed to 60 billion euros of monthly bond purchases (compared to expectations for 50 billion), it’s a great time to consider the junior gold miners.
According to the Profit Scanner powered by Recognia, several of these stocks are sending a clear bullish signal in the intermediate term.
There’s plenty of volatility in this group. So, these stocks are not for the faint of heart…but when you time your trade correctly, that volatility makes for tons of potential upside as well.
Timmins Gold Corp (NYSEMKT:TGD)
Timmins Gold Corp (NYSEMKT:TGD) is one such junior gold miner that’s been flashing bullish signals for the last week. At the close on Jan. 21, Profit Scanner identified a bullish Head and Shoulders Bottom in TGD stock’s chart that carries an intermediate-term target of $1.46 – $1.52 (implying 17% – 22% upside).
For those who may be new to technical analysis, the Head and Shoulders Bottom is so called because it’s made up of three successive price declines: In the middle of the pattern is the lowest low (the “head”), and on either side are two higher lows (the “shoulders”) at roughly the same level.
These typically occur at the end of an accumulation period after a significant downtrend. Then, the pattern is confirmed when the stock breaks up through resistance on a surge in volume — signaling a reversal to a new uptrend.
Now, a technical signal is not a prophecy…but there are a few criteria to watch for that would support the validity of the pattern. One is the location of TGD stock’s moving average: for this pattern, the 200-day moving average should be above the Head and Shoulders Bottom.
As you can see in the Timmons chart above, the 200-day moving average is right around $1.40, and the pattern occurred well below that price. As mentioned before, a volume spike is another good sign; this signal emerged on nearly 380,000 shares traded, well above the average volume of about 280,000 shares.
McEwen Mining Inc (NYSE:MUX)
McEwen Mining Inc (NYSE:MUX) is another junior gold miner that just made a bullish Head and Shoulders Bottom. In this case, the signal occurred at the Jan. 20 close on 2.4 million shares traded, and Profit Scanner is looking for a rally to $1.67 – $1.75.
The 200-day moving average sits overhead at around $2.10, so there’s plenty of room for the expected 23% – 30% gain to occur. Look for the pattern to complete in the next 34 trading days.
Almaden Minerals Ltd. (USA) (NYSEMKT:AAU)
The same day, another junior gold miner also completed a bullish Head and Shoulders Bottom: Almaden Minerals Ltd. (USA) (NYSEMKT:AAU).
Profit Scanner expects AAU to reach $1.49 – $1.55 in the intermediate term, a 23% – 28% rally from the Jan. 20 close.
The next day, Almaden enjoyed a double moving-average crossover, when the 21-day moving average overtook the 50-day moving average.
This shorter-term signal lends support to the idea that AAU, like its peers TGD and MUX, will trend higher and is ripe for the picking by opportunistic traders.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.