John: Yesterday, Seafield Resources (SFF, TSX-V) opened down at 53 cents, dropped a penny lower to 52 cents and then recovered to close at its high of 56 cents for a loss of 1 penny on CDNX volume of 1.8 million shares. This morning, as of 7:30 am Pacific, SFF is off 2 pennies at 54 cents. The Seafield chart looks very strong as explained below.

Looking at the 2 month daily chart, we see that during the month of December SFF has experienced extreme volatility. On Dec. 3, Seafield gapped up at the open to 35 cents and during the day rose to a high of 77 cents before closing at 57 cents (total CDNX volume of a whopping 71 million shares) for a gain of 34 cents thanks to a spectacular drill result from its Miraflores Property in Colombia.

In the 9 subsequent sessions, Seafield has found strong support at the Fibonacci 50% level (blue set). During this period the average volume has consistently declined, validating the period as a consolidation. The EMA(20) (exponential moving average) is climbing rapidly to provide bullish support and now sits at 45 cents. Note that on Dec. 2, the day prior to the big move up, the price was sitting right on this moving average.

The green set of Fibonacci levels shows the next target to be $1.05 (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci target based on technical analysis as a guide for investors).

Looking at the indicators: The RSI is declining at the 65% level and unwinding from the overbought condition due to the big move to the upside.

The Slow Stochastics has both the %K (black line) and the %D (red line) pointing down at 65% and 69%, respectively. This is typical for a stock in consolidation.

The Chaikin Money Flow (CMF) indicator shows that although the buying pressure is not bullish at the moment, it is increasing.

Outlook: This stock is consolidating and has shown that the 55 cent level can provide strong support. The fundamentals are very strong and the technicals are providing a solid base for future upside moves.

Note: The writer does not hold a position in SFF.