Stock Of The Day – Will The Move Higher In Gold Make Barrick Break Out?

Shares of Barrick Gold Corporation GOLD are slightly higher Monday. They are at resistance and may be about to break through it. This could lead to the shares moving higher and a new uptrend forming.

The chart of Barrick has the attention of many technical analysts because there is well-defined support and resistance. This is why it is our Stock of the Day.

Gold is trading near all-time highs and Barrick has followed it.  Some analysts say the move higher is a classic ‘flight to safety.' The tech sector has been beaten down and much of the money that came out of it went into the gold market.

You can see on the chart that Barrick is trading close to the resistance around $19.00. This level has been important for the stock. It has been both resistance and support.

Resistance is defined as a price level or zone where there is a significant amount of sell interest. When a rally reaches a resistance level it pauses or ends. This is because there are enough sell orders to fill all of the buy orders.

Investors and traders looking to buy can acquire all the shares they wish to without pushing the price up.

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If the resistance ‘breaks,' meaning the stock moves above it, it can be a bullish dynamic. This means the people who created the resistance with their sell orders are out of the way. They have either finished or canceled.

The buyers may be forced to pay premiums and outbid each other. This could result in a snowball effect that can create a new uptrend.

There is resistance around the $19.00 level due to remorseful buyers. These are people who purchased shares around $19.00 while the shares were support.

When the price dropped below this, many of them decided they made a mistake. Some vowed to eventually get out at breakeven if possible. So, when the stock returned to $19.00 they placed sell orders.

The large concentration of these orders has formed resistance. But if the price of gold keeps moving higher, Barrick should break this resistance and move higher as well.

If gold keeps trending higher Barrick will probably break through.

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