CNL.TO Continental Gold (TSX) – Betting On Colombia's Next Ventana

by Olivier on November 17, 2010

Today Eike Batista made an offer to buy out VEN.TO – Ventana Gold. This sparked a rush into Colombian Gold mining stocks. My favourite is CNL.TO – Continental Gold which I bought today. I planned to wait and give the pattern more time to set up but changed my mind when I saw the news about VEN.TO. Looking back I probably wasn’t patient enough with my entry. Then again hindsight is always 20/20. That being said the chart looks great. The overall pattern is extremely bullish. Today’s lack of follow through after the initial thrusting move might be a potential red flag. We’ll see what happens. My stop loss will take care of everything.

CNL.TO TSX Continental Gold Colombia Mining STock Technical Analysis Price Chart Bullish Pattern

Up-to-date CNL.TO – Continental Gold chart on my public list.

The volume coming into the stock is a good sign. It will attract traders scanning for above average volume which ultimately will increase the stock’s visibility and liquidity. An obvious price target should be 10$ as round numbers tend to act like powerful price magnets.

Right now this is the best looking chart of all the Colombian miners out there. I believe odds are great for CNL.TO – Continental Gold to be the next Gold mining superstar in Colombia.

As opposed to GSL.TO – Greystar Resources and GWY.V – Galway Resources this is a ‘new story’ and those tend to be the best performers. As you can see the stock is very close to its all time high. This is typically a very bullish situation as there is no overhead resistance. A breakout to new highs implies a technical price target around the 10.00 – 10.50 level. Today I put my money where my mouth is. Another one I am watching and which is also part of my public list is BAT.V – Batero Gold. Continental Gold Ltd. (TSX:CNL) is an advance-stage gold exploration company with an aggressive development timeline for its flagship Buriticá project in Colombia, South America. The Company’s extensive portfolio of gold projects includes more than 200,000 hectares of highly-prospective ground in areas of historical gold production in Colombia. Priorities include advanced exploration and definition drilling programs at its high-grade Buriticá gold project and phase-one drilling at the Berlin project, which produced over 413,000 ounces at 16g/t gold historically. Continental is also running several early-stage exploration programs on its other Colombian properties. Formed in April 2007, the Company is driving to increase its value through the development of the Buriticá project and exploration of the precious metal deposits and base metal deposits that have significant gold credits. Continental’s technical team on the ground in Colombia has a wealth of experience in mining and exploration. The Company has taken full advantage of their in-depth knowledge of Colombian mineral properties to acquire properties with substantial exploration and development potential. Continental’s international management team has a successful track record of discovering and developing bulk mining targets and multi-million ounce gold deposits.

A few thoughts regarding my other portfolio positions:

  • PGD.TO – Peregrine Diamonds: Not happy with the price action. Looking back I should have raised my stop loss to my entry price level. That way I would have avoided letting a winning trade turn into a losing trade. I thought about selling but decided to let my stop loss take care of the position. The stock could still be in the process of building a bullish flag but the fact it gave back all the gains after the breakout is a negative.
  • TMB.TO – Tembec: Very nice and impressive intraday reversal after the initial sell-off. They really shook the tree and it looks like those who wanted out have now sold their position. Follow through tomorrow would be bullish action.
  • DNN / DML.TO – Denison Mines: If you look at a logarithmic chart or my DNN – Denison Mines weekly chart analysis it is much easier to argue for a bullish continuation pattern. I see good potential for a bullish wedge in the making. Still, I’d like to see DNN regain 2.50 – 2.60 and hold that level. That would confirm my bullish assumptions.
  • UEX.TO – UEX Corp.: Great bounce off the 1.80 level which is very important as UEX.TO spiked @ 1.80 in April last year. Obviously ‘resistance turned into support’. I consider UEX.TO trading above 2.00 to be technically constructive and bullish action. The longer it can trade above 2.00 the greater the odds for much higher prices down the road.

The essence of profound insight is simplicity. – Jim Collins

My public list with all my charts can be viewed here:

Buenas noches!

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