Snowline Gold Corp. (SGD:CSE; SNWGF:OTCQB) has firmed up nicely since it was mentioned on the site as looking attractive in an update on X-Terra Resources posted on the 26th, with a couple of bullish white candles appearing on the chart where it closed at the day’s high, as we can see on the latest 6-month chart below. This tends to confirm our suspicion that it is about to reverse off the support at the lower boundary of the large trading range that has formed from the peak last August, following last year’s big runup.
You may recall that we rode part of last year’s big runup but sold way too early. Other bullish factors coming into play that we can see on this chart are the relatively strong Accumulation line which has picked up well over the past couple of days, the diminution of downside volume as the prior correction has progressed, the 200-day moving average now catching up to support the renewed advance and the MACD indicator now crossing its moving average for the first time in many weeks with the MACD histogram (bars) crossing the zero line into positive territory which is strongly supportive of an immediate rally.
With all these positive factors in play and the price firming up but not having moved much yet, it is still a strong buy here, and a stop can always be placed beneath the support just in case it breaks down.
On the 2-year log chart, we can see that the recent correction has not broken the price down from the strong, steady uptrend in force from the middle of 2021. The powerful rally last year caused it to “get ahead of itself” as it popped out of the top of the channel to become massively overbought on its MACD, hence the subsequent long rectangular consolidation to digest this move.
Could the pattern from last August be a top?
Whilst we can’t entirely rule out the possibility given that momentum has seemingly broken down, the strong Accumulation line and now bright outlook for the sector make it unlikely, and the other side of the coin is that the now quite deeply oversold condition has created a high degree of “compression” that could springboard the price much higher from here. The right way to handle this setup, therefore, is to buy as much as you want here without fear because you can protect yourself by placing a stop beneath the nearby support just in case.
Lastly, the 4-year chart shows us that the upside potential for Snowline is even bigger than one might think looking solely at the shorter-term charts, for on this chart, we see that it may be adhering to the parabolic uptrend shown, and if this parabolic uptrend holds it could slingshot the price too much higher levels, which of course implies that the entire sector is headed much higher — hardly surprising when one considers what is going on in the world and the grim outlook for the dollar which is well along the road now to losing its reserve currency status.
Snowline Gold is therefore regarded as a strong Buy here and positions can be protected by the simple expedient of placing a stop beneath the nearby support. Note that if Big Money should run these stops by briefly forcing the price beneath the support in order to shake people out and mop up their holdings, but it then bounces back above the support, any liquidated positions should be bought back.
Snowline Gold's website.
Snowline Gold Corp. closed at CA$2.64, $1.98 on January 27, 2023.
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
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