Are you looking for a promising investment opportunity in the gold mining sector? Look no further! WESDOME GOLD MINES LTD (TSX: WDO) is currently showcasing a captivating chart pattern that could indicate a significant upside potential. In this article, we'll delve into the inverse head and shoulders pattern forming in WESDOME's stock and explore why it might be a lucrative investment opportunity.
Understanding the Inverse Head and Shoulders Pattern
The inverse head and shoulders pattern is a powerful reversal pattern that occurs at the end of a downtrend. It consists of three distinct parts: the left shoulder, the head, and the right shoulder. The pattern is considered bullish when the stock price breaks above the neckline, which is a horizontal line connecting the highest points of the left and right shoulders.
In the case of WESDOME GOLD MINES LTD, the inverse head and shoulders pattern is forming as follows:
- Left Shoulder: The left shoulder represents the highest point of the downtrend, where the stock price reverses from a downtrend to an uptrend.
- Head: The head is the lowest point of the downtrend, where the stock price pulls back slightly before resuming its uptrend.
- Right Shoulder: The right shoulder is the second highest point of the downtrend, where the stock price reverses from an uptrend to a downtrend, but only briefly before reversing back to an uptrend.
Why WESDOME's Inverse Head and Shoulders Pattern is Promising
There are several reasons why WESDOME's inverse head and shoulders pattern is a promising investment opportunity:
- Historical Relevance: The inverse head and shoulders pattern has a high success rate in predicting reversals. According to research, about 80% of these patterns result in a successful reversal.
- Volume Confirmation: In WESDOME's case, the pattern is supported by strong volume, indicating a strong buying interest in the stock.
- Support and Resistance Levels: The neckline of the pattern acts as a strong support level, suggesting that the stock price will likely hold above this level.
Case Study: Goldcorp Inc.
A similar pattern formed in Goldcorp Inc. (TSX: G) in 2016, which resulted in a significant upside move. The stock price rallied from
Conclusion
In conclusion, the inverse head and shoulders pattern forming in WESDOME GOLD MINES LTD (TSX: WDO) is a compelling investment opportunity. With a strong historical success rate and support from volume and technical indicators, WESDOME's stock could be poised for a significant upside move. As always, it's important to conduct thorough research and consider your own investment strategy before making any investment decisions.
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