Gold Bullion Development: Breakout Imminent

Gold Bullion Development (GBB, TSX-V) went in the opposite direction of the overall markets today and our technical analyst, whose track record on this stock has been almost perfect, is calling for a major GBB breakout as early as tomorrow. You can read John’s analysis below the updated chart:

John: On a day when all North American markets displayed a lot of red ink, Gold Bullion Development (GBB, TSX-V) not only showed resilience but strength to close at 39.5 cents, a 1.5 cent increase from Friday’s close.

Looking at the chart we can see that GBB traded in the range of 36.5 cents to 39.5 cents on lower than average volume of 743,000 shares.

On the chart I have drawn a bullish “Cup with Handle” pattern (blue lines – cup, black lines – handle), similar but smaller than that shown on the YRI chart last week. YRI broke upward the very next day. This pattern can be of any size over any time frame.

Friday’s candle was a doji (indecision) but today we have a very bullish white candle with a shaven top, thus overcoming the indecision.

The volume has decreased in the last 3 days as we would expect when a stock is in consolidation.

The RSI is turning up and is above 50% – bullish.

The Slow Stochastics has the %K (black line) above the %D (red line) – bullish.

The ADX trend indicator has the ADX trend strength (black line) flat (due to consolidation pattern) and above the +DI (green line) which is above the -DI (red line) – a bullish orientation.

The chart indicates that we can expect GBB to break above the recent high of 42.5 cents with a near-term target of 50 cents, perhaps as early as tomorrow.