Allied Nevada Gold

My final breakout trading prospect is Allied Nevada Gold ( ANV), a gold mining company. This stock has been destroyed by the bears so far in 2013, with shares off sharply by 84%.

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If you look at the chart for Allied Nevada Gold, you'll notice that this stock has been downtrending badly for the last six months, with shares plunging lower from over $20 to its recent low of $3.54 a share. During that downtrend, shares of ANV have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ANV recently saw some higher volume capitulation selling down to that $3.54 low. That could be marking a low for the stock, and shares have now started to uptrend in the near-term from $3.54 to its recent high of $4.82 a share. That rebound is starting to push shares of ANV within range of triggering a major breakout trade.

Traders should now look for long-biased trades in ANV if it manages to break out above some near-term overhead resistance at $4.82 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 4.02 million shares. If that breakout triggers soon, then ANV will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $5.79 a share to $7 to $7.50 a share.

Traders can look to buy ANV off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4.25 or that recent low of $3.54 a share. One could also buy ANV off strength once it clears that breakout level with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including and You can follow Pedone on Twitter at or @zerosum24.

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