From the high of $21.16 in July, 2008, Galleon Energy (yesterday's closing price $6.98) had a sharp decline to $2.86 in December of the same year (A-B). Since then the stock has been building a lengthy base with the upper resistance at $6.25-$7 (see shaded area). The recent rise above $7 was extremely bullish, and signalled the start of a new up-leg toward significantly higher targets.

Technical indicators including the rising 40-week moving average, the VSI and the MACD (see lower panel) confirm the bullish status. Only a decline below $5.50 would reverse the current long-term up-side potential.

Measurements provide an initial technical target of $9 (a 29 per cent appreciation potential from current levels update ). The large base (between B-C) supports significantly higher targets.

Ron Meisels is a contributor to the www.NA-marketletter.com web site. Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary.

Source: www.decisionplus.ca