Gold barsSEBASTIAN DERUNGS/AFP / Getty Images
Following our June 6, 2009 ($9.46) report, Gammon Gold Inc. completed the right shoulder of an extremely bullish technical pattern known as an Inverse head-and-shoulder (see solid lines). The recent rise to $13.19 (A) signalled the breakout above the neckline of this pattern (see dashed line) and the start of a new major up-leg. The current retracement should provide a good buying opportunity (B). Only a sustained decline below the 40-week moving average (40wMA, currently at ±$9.25) would reverse the positive long-term status of this stock.
Point & Figure measurements provide targets of $14 and $16 (40-per-cent and 60-per-cent appreciation potentials from current levels). The large Inverse head-and-shoulder pattern 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