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

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.