Beaten Down NCM Fighting Back

Gold miners across the world have been noted to be severely underperforming the spot gold price in recent times and NCM is no exception. NCM has shown recent resilience by arresting is decline from its QE3-inspired moves back in mid to late 2012. Its 2012 low of 20.89 seems to have held for now after some serious questions were thrown a couple of weeks ago.

On the weekly chart, there seems to be ample room for NCM to vault back at least towards the downward trending resistance line dating back from August 2011 at around the mid-25 region. Assuming that NCM can maintain a weekly close around today’s price level or better, the downward move from late October 2012 seems to be complete with the resistance line breached. This may set up nicely for a decent risk-to-reward trade if traders want to target the 23.6% retracement of November 2010 highs at 26.22. Stops may be placed at around the 21.00 area, slightly below the near term support line originating from the 2012 lows. Bulls can also take comfort in the MACD movement which may indicate the beginnings of a clear bullish signal.

On the daily chart, we use a retracement to the July 2012 lows of NCM instead. Here we may see some resistance at the 61.8% retracement level of 24.36, before attempting a shot at the 50% level of 25.43. Bulls will want to see a daily close above the 50DMA, which NCM managed to test today. We are looking for the NCM price action to stay within the short-term upward channel and some consolidation above 23.80 to indicate a cycle low at 21.53 has formed. Subsequently, if 24.36 is also cleared, we should see a test of 25.43.