Gold Fields Ltd. ADR (GFI) has been building a base pattern for a number of years and is in the process of making an upside reversal. With the U.S. Dollar weak and the yellow metal trading above $1300 Tuesday morning, a closer look at GFI is at the top of my 2018 "to do list" for recommending a long position.
Let's check out the charts and indicators to plot a strategy for the new year.
In this daily bar chart of GFI, below, we can see that prices have made higher lows from March. Notice the higher low in May, June/July and now in December? Highs were made in April and September and GFI recently broke a minor high from late November.
Prices are trading above both the rising 50-day moving average line and the rising 200-day line. The daily On-Balance-Volume (OBV) line has moved up and down with the price action, but I like the new buying that is coming in this past month.
The Moving Average Convergence Divergence (MACD) gave cover shorts buy signals in late October and in early December, before crossing the zero line late December for an outright go long signal.
In this weekly bar chart of GFI going back three years, below, we can see a low back in late 2015 and a higher low in early 2017. Since early 2017, there are a number of higher lows and prices are above the rising 40-week moving average line.
The weekly OBV line has been neutral for much of the past year, but shows a new rising phase from mid-October. The weekly MACD oscillator is above the zero line and poised for a fresh crossover and outright go long signal.
In this five-year weekly bar chart of GFI, below, we can see the entire base pattern on this stock -- impressive, I think. Crossing above $4.50 is one breakout level, and above $6.00 and $6.50 is another major breakout area. This base pattern easily measures to the $10-$11 area longer-term.
In this Point and Figure chart of GFI, below, we can see an upside price target of $6.00 but a trade at $6.50 would refresh the trend and probably generate even higher price targets.
Bottom line: aggressive traders looking to get some exposure to the precious metals should consider buying GFI at current levels and on strength above $4.75. Risk a close below $3.90.