Suri Duddella highlights gold and gold mining stock breakout signals.
Gold stocks have rallied significantly in 2020 and many are forming Cup & Handle formations on their monthly charts.
Here is a list of gold and gold-mining related stocks and their 2019 and 2020 performances.
Gold related Stocks year to date (2020) performance chart.
Cup & Handle Patterns
The Cup and Handle Chart pattern was developed and popularized by William J. O’Neil in the 1980s through his CANSLIM methodology, Investor’s Business Daily articles and his book "How to Make Money in Stocks."
The Cup and Handle pattern resembles a cup with a handle and are continuation patterns that usually form in bullish trends. Most cup and handle patterns are reliable and offer great trading opportunities. They also form in all markets and in all time-frames. The “Cup” formation is developed as consolidation phase during price rallies from the round bottom formation over multiple weeks to months. The “Handle” part forms due to a price correction after “Cup” formation and before a clear breakout to the upside.
Cup and Handle pattern structures show the momentum pause after reaching a new high in a U-Shape form, followed by another attempt to breakout. When this breakout from the rim of the cup fails, it starts to fall back to build the "Handle" structure. Usually, the handle structures are small, and the handle depth should not exceed more than 50% of cup depth. The handle part of the pattern generates interest in buyers as they expect the pattern to breakout from these levels. The pattern is valid only if price convincingly breaks out with increased volume above the rim of the cup levels (see chart below).
Gold Futures Cup & Handle Pattern
The Comex Gold continuous futures is forming a Cup and Handle pattern on its monthly chart and trading below the breakout level of $2,118.2 (see chart below). A long trade is entered above the breakout level with a stop placed below the lowest low of the mid-cup, $1,662.60, and the handle low $1,785.6. Profit targets are placed at $2,464.30, $2,681 and $2,834.
Newmont Corp. Cup & Handle Pattern
Newmont Corp. (NEM) is forming a Cup and Handle pattern on its monthly chart and trading near the breakout level of $71.64 (see chart below). A long trade is entered above the breakout level with a stop placed below the lowest low of the mid-cup $43.03, and the handle low $59. Targets are placed at $93.21, $106.80 and $116.40.
Agnico Eagle Mines Ltd. Cup & Handle Pattern
Agnico Eagle Mines Ltd. (AEM) is forming a Cup and Handle pattern on its monthly chart and trading below the breakout level of $88.30 (see chart below). A long trade is entered above the breakout level with a stop placed below the lowest low of the mid-cup, $54.60, and the handle low of $61.75. Targets are placed at $113.74, $129.70 and $141.
