An under-$10 name in the gold and silver complex that looks poised for higher prices is
, which is focused on advancing its principal property, the Esaase Gold Project, to commercial production. In addition to its principal project, the company holds a portfolio of other Ghanaian gold concessions in various stages of exploration. This stock has is off to a slow start in 2012, with shares off by around 11%.
If you take a look at the chart for Keegan Resources, you'll notice that this stock recently found buying interest at around $2.80 to $2.70 a share, and the upside volume off that buying has been expanding dramatically. Following those buyers stepping into the stock, KGN has now started to push back above its 50-day moving average of $3.03 a share with decent volume. That move has also pushed KGN within range of triggering a near-term breakout trade.
Traders should look for long-biased trades in KGN if it can manage to trigger a break out above some near-term overhead resistance levels at $3.44 to $3.69 a share, and then above $3.93 a share with high volume. Look for volume off a sustained move or close above those levels that hits near or above its three-month average action of 216,902 shares. If that breakout triggers soon, then KGN will have a great chance of re-testing and possibly taking out its next major overhead resistance levels at $4.76 to $5.45 a share.
Keep in mind that any high-volume move or close for KGN above its 200-day moving average at $3.69 a share, should be consider bullish technical price action. Basically, this would increase the probability for higher prices, and for those breakout levels triggering soon.
Traders can look to get long KGN off weakness, and simply use a stop near its 50-day moving average of $3.03 a share, or down near $2.87 a share. One could also get long once it takes out $3.44 to $3.69 a share with high volume, and then simply use a stop at around $3.20 a share. I would look to add to either position once KGN clears $3.93 a share with strong volume.
To see more hot under-$10 equities, check out the
Stocks Under-$10 Setting Up to Explode
portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
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