Newmont Mining Preparing to Break Out?

 | Aug 09, 2017 | 11:56 AM EDT
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Newmont Mining (NEM) has been trading sideways around $34 since October. You might not be impressed with sideways but when I look at other miners in this space I see a lot of downtrends so on a relative basis NEM is telling us where the money is going.

If we dig a little beneath the surface we might be more constructive on this miner as gold prices climb. Let's check and see what the charts and indicators are telling us.

In this daily bar chart of NEM, below, we can see the sideways or neutral trend since October. Prices have swung above and below the $34 level. Prices have crossed above and below the popular moving averages but since mid-July prices have moved and stayed above the now rising 50-day and 200-day averages. Now look at the On-Balance-Volume (OBV) line which made a low in December and has moved higher in fits and starts. A rising OBV line for seven months suggests some significant accumulation. The daily Moving Average Convergence Divergence (MACD) oscillator turned back above the zero line in July for an outright go long signal.

In this weekly chart of NEM, below, we can see that prices are above the flat 40-week moving average line. The weekly OBV line peaked last August and has drifted lower till the end of June. We may be early but it looks like the OBV is turning up on this time frame. The weekly MACD oscillator is also turning higher to a new buy signal on this time frame.

In this point and figure chart of NEM, below, we can see three peaks at $37.00. A trade at $38.00 will be a breakout and open the way for a possible longer-term price target of $47.

Bottom line -- NEM has a pretty good looking base pattern. A close above $38 will be a breakout and traders who play the long side should risk a close below $34 and investors should risk a close below $32.

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