When it comes to trading, some investors look to fundamentals and others look to technical analysis. It’s not very often in the small to mid-cap space that only one technique is used, but the combination of a growing company in a strong industry with a solid stock chart has proven to be a useful technique for many investors.
Sunward Resources Ltd. (TSX-Venture:SWD) is a well-capitalized Vancouver-based company focused on the exploration of gold/copper porphyry projects in Colombia, South America. The Company has strong operational expertise in Colombia and is currently drilling its Titiribi Project southwest of Medellin with a goal of increasing the NI 43-101 inferred resource.
Yesterday, the Company reported a significant discovery of high-grade mineralization at the surface of the Titiribi Project. Drill hole CV028 intersected a zone of gold-copper mineralization at the southern extension of the Cerro Vetas target significantly higher in grade than other mineralized intercepts previously observed at the project. Analysis from the hole returned a weighted average assay value of 1.17 g/t gold, 0.16% copper and 1.04 g/t silver over 104.5 metres, between 0 and 104.5 metres down-hole depth.
Technically speaking, the chart has been on a strong drive upward since August 2010 when the price per share bottomed at 58 cents. The run continued to a peak at $1.87 per share, which represented a new 52-week high, during the second week of January.
The indicators, including the much-used Relative Strength Index and Moving Average Convergence Divergence, reached extremely high levels at that time, but have since retraced in classic "bull run" fashion. Since the peak, a retracement happened in price per share to hold a new support at $1.60 while the indicators reset and a "cup" or "rounded bottom" was formed. The "cup and handle" pattern is well regarded as one of the strongest consolidation continuation patterns in all of technical trading. It is often followed by a large move as the upward trend begins again. While the SWD chart has not yet formed a handle, resistance is lying right in front of it as the price is climbing to challenge the old $1.87 high.
The indicators are completely reset and have either held in bull territory or have turned and are entering the upper portion of the indicators again, which is where momentum traders want to see them in order to support the idea of another high being made. Volume has slacked off during the retrace which, once again, supports the candlestick pattern.
The Chaikin Money Flow and the Accumulation/Distribution are slacking behind a little bit and are the final component to this chart truly entering into full-blown bull mode again. Technical traders are on alert for the news yesterday to drive the stock price higher and challenge the upper resistance and the possibility of a "handle" forming to complete the pattern.
With only 40 million shares in the float, traders of all kinds seem to be turning their attention to Sunward Resources, its exploration efforts and its stock chart. As always, proper due diligence is encouraged.
