Gold Stocks & Important Technical Indicators To Know
One thing that charting experts look for are stocks that are trading above their 50-day moving average line (50MA). Why is this?
When a stock is trading above the 50MA, it’s considered bullish. When a stock is above the 50MA the line can act as a support. Typically, this level will be “tested” in times of downtrend. If a gold stock holds above this level, the 50MA can be considered a strong level of support for the most part.
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When a stock is below the 50MA it’s typically bearish because the 50MA acts as resistance and can keep the stock down. The curl up and down of the 50MA can also be a sign of a possible trend reversal. Let’s take a look at some gold stocks that are sitting above their 50-day moving average:
Barrick Gold (GOLD)
Barrick Gold stock (GOLD – Stock Report) is currently sitting above its 50MA. This chart is a good example of what a stock is supposed to do when the 50MA is broken. You can see at the beginning of June the stock breaks above the 50MA and then held it as support. Then you can see the 50MA start to curl up and act as the trend line for Barrick gold stock. On this recent pullback, you can see how the 50MA held and acted as support.
Harmony Gold (HMY)
The next stock is Harmony gold stock (HMY – Stock Report). The chart looks very similar to Barrick Gold. On this chart below you can see at the beginning of June the stock broke above the 50MA and then it started to hold as support. Ultimately it ended up acting as the trend line. You can see on this recent pullback to the 50MA, it is holding the stock up and acting as support. Prior to this, we see it pull back to the 200-day moving average, which essentially acted as a “safety net support.”
Eldorado Gold Corp. (EGO)
Eldorado Gold Corp. (EGO – Stock Report) is the next gold stock we will be looking at. It’s got a similar sett-up as the charts above. There was a strong move in June where the stock broke above the 50MA and, like the charts above, you can see how it acted as support. It then acted as the trend line. After curling down in September/October the 50MA started to hold the stock down. Now you can see the 50MA starting to curl back up and holding the stock as support starting in February:
Gold Stocks & Moving Averages
All of these charts are great examples of why investors should look closely at gold stocks near the 50MA. Look how after these stocks broke above and held the 50-day moving average and how it holds as support for the stocks. In many cases, it then acts as the trend line.
When gold stocks are trading above the 50MA and it starts to curl up, you can use it to monitor potential support levels. Meanwhile, when the 50MA curls down and the stock trades below it, this can be a potential level of resistance. At both points, when gold stocks get closer to the trend line, it could be a good time to be watching these stocks.
Essentially, if they can hold the 50-day moving average the stocks could push off the 50-day moving average and move back up towards highs. ON the other hand, it could be seen as a resistance level to push the stock back down. At the end of the day, no single indicator will dictate your trading. But used in conjunction with the rest of your trading tools might help you see more angles of the market.
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