Eldorado Gold (EGO) is another precious metal mining name that has been lifted by the rising tide of gold bullion prices. Prices have more than doubled so far this year, but more gains lie ahead.
In this daily chart of EGO, above, we can see over the past months a turn from down to up for the price of EGO. With the decline to a new low in January, the bottom pattern is not as "text-book pretty" as other charts, but despite this brief decline, EGO has done okay.
The 50-day moving average line does not cross above the 200-day average until April, but it still crosses. The On-Balance-Volume (OBV) line is rising slowly for much of the past twelve months, but buyers became more aggressive beginning in March. EGO has been correcting from its May high, and the lower low made in June created a small, bullish divergence versus the momentum study making a higher low.
In this five-year weekly chart of EGO, above, we don't see a three-year base pattern, but we do see that EGO broke its downtrend from its 2011 peak. The longer a trend is in force, the more important it becomes -- and when a long-term trend is broken, we should pay more attention to it.
EGO is now above its rising, 40-week moving average line. The weekly OBV line shows an uptick and a subsequent decline, recently. We expect to see EGO continue its rally and we would want to see the rally confirmed by a strongly rising OBV line, telling us that buyers have been accumulating more shares in the weeks when EGO has closed higher. There is a fair amount of chart resistance above $5 from 2014, and EGO will have to absorb that on its climb higher.
