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Randgold: Reversal Analysis

Jan. 11, 2014 3:59 PM ETGOLD
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Long/Short Equity, Special Situations, Momentum, Contrarian

Seeking Alpha Analyst Since 2013

Market updates are no longer posted to this site. All updates and communication are posted on LinkedIn: https://www.linkedin.com/profile/view?id=18898995&trk=nav_responsive_tab_profile Please request a link to be added to my network. Thank you, Paul Mosgovoy

As stated in this report, Randgold Resources Limited (GOLD) penetrated support with volume and has now moved back into the previous trading range.

GOLD Daily Chart

Charts by StockCharts.com

The initial criteria to participate in this trade has been met: Our entry was at 60.94, with the requirement to be in-the-green at the close.

With GOLD pushing higher into close at 61.57, our expectation is for a sustained impulsive move higher.

We can see that the daily chart of GOLD is somewhat choppy with frequent gap-moves.

Pulling out to the weekly time-frame reveals a much smoother picture. Therefore, management of this trade will be done using the weekly chart. The daily data will be used to help fine-tune the exit.

GOLD Weekly

Charts by StockCharts.com

No trade should be entered without a definitive stop and exit in mind. Our hard stop at this point is the prior session's low at: 59.19. However, if price action begins to erode, we may exit the trade without waiting for the stop to be hit.

The weekly chart shows a potential wedge formation. Subsequent price action will provide more data as to whether or not this chart pattern is in effect.

A rule of thumb for wedge and triangle formations is that for the pattern to yield a measured move reliably, the breakout needs to take place prior to the last 1/3rd of the formation.

The weekly chart shows the approximate location of that last 1/3rd.

We will address the measured move target should a breakout become imminent.

There is one caveat to the up-side breakout potential. That is, price action tends to break out in the direction of entry into the pattern. This means that from a probability stand point (on wedge formations), the breakout is favored to the down-side.

This is normal for markets. There are always two scenarios in play.


This report is for discussion purposes and contains our opinions only.

This posting is to publicly document our thinking and market analysis actions within the Three Ten Trading entity. The data was obtained from sources believed to be reliable. However, we make no guarantee as to the accuracy of that data.

Investing or trading in equities, futures or options may result in a significant loss of capital, total loss of capital or a loss greater than available capital.

We are not advocating any stock or in any way offering portfolio management advice or stock selection service.


Paul Mosgovoy, President: Three Ten Trading, LLC

Thank you for reading.

Disclosure: I am long GOLD, .

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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