Blackwolf Copper & Gold Ltd. (BWCG:TSX.V) is another junior copper stock that looks poised to reverse into a bull market following a severe bear market and then a basing process at a low level.
The 6-month chart — and longer-term charts — does not, at first sight, look particularly inspiring with a rather limp-looking rally in January beneath a still quite steeply falling 200-day moving average followed by a renewed decline over the past week, but if we look more carefully we can see that the price has been marking out a downsloping Head-and-Shoulders bottom with a significant pickup in upside volume on the January rally.
In addition, we can see that downside momentum (MACD) has actually been easing since last July and has turned positive. If the H&S bottom interpretation is correct, and it is supported by the positive patterns in other copper stocks, then the dip over the past week has brought it down, or close to, the Right Shoulder low of the pattern, and if this is so we are at a great entry point here.
The 4-year chart shows us the entirety of the severe bear market that leads to the supposed Head-and-Shoulders bottom. As we can see this was a brutal bear market that brought it down from a high of about CA$1.50 to a recent low of CA$0.20.
The bear market downtrend has taken the form of a Falling Wedge as it progressed which is interpreted as bullish as it shows diminution of selling pressure over time, which is also reflected by the easing of downside momentum shown by the MACD indicator trending back towards the zero line.
This is why such a contracting downtrend is frequently the precursor to a reversal into a new bull market. With the Wedge pattern now closing up and the price has dropped back to an important long-term support level, a breakout may be imminent.
On the long-term chart which shows the entire history of the stock going back to late 2009, we can see that Blackwolf may have been marking out a gigantic Cup & Handle or Pan & Handle base since as far back as 2012 – 2013, following a savage and steep bear market, with the bear market from the April 2021 peak forming the "droopy" Handle of the pattern.
If this is so — and the volume pattern is consistent with it being such a base — then it promises a major bull market ahead that will result in big percentage gains from the current low price which should prove to be a great entry point from price and time perspective.
Blackwolf Copper & Gold is therefore rated an immediate strong speculative Buy here. Blackwolf trades in light volumes on the US OTC market where volumes should improve if a bull market takes hold as expected. Limit orders should always be employed in this market.
Blackwolf Copper & Gold's website.
Blackwolf Copper & Gold closed at CA$0.25 on February 19, 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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Charts provided by the author.