Goldcorp Inc. (NYSE: GG)

Goldcorp Inc. engages in the acquisition, development, exploration, and operation of precious metal properties. It primarily explores gold, silver, copper, lead, and zinc. The company’s principal mining properties include Red Lake, Porcupine, and Musselwhite gold mines in Canada; Peñasquito gold/silver/lead/zinc mine, and Los Filos and El Sauzal gold mines in Mexico; Marlin gold/silver mine in Guatemala; Alumbrera gold/copper mine in Argentina; and Marigold and Wharf gold mines in the United States. Goldcorp Inc. was founded in 1954 and is headquartered in Vancouver, Canada.

Please take a look at the 1-year chart of GG (Goldcorp, Inc.) below with my added notations:

1-year chart of GG (Goldcorp, Inc.)

After trending lower for most of the year, GG has formed what appears to be a Double Bottom (red) price pattern. The pattern is as simple as it sounds: Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again. As with any price pattern, a confirmation of the pattern is needed. GG would confirm the pattern by breaking up through the $41 resistance (navy) that has been created by the Double Bottom pattern.

Keep in mind that simple is usually better. Had I never pointed out the Double Bottom pattern, one would still think this stock is moving higher if it simply broke through the $41 resistance level.  In short, whether you noticed the pattern or not, the trade would still be the same: On the break above the key $41 level.

The Tale of the Tape: GG seems to have formed a Double Bottom price pattern. A long trade could be entered on a break above the $41 resistance with a stop placed under that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT