Yamana Gold Upside Looming?

Published on Friday, 27 January 2012 19:39 Written by Danny Miller

New York, January 27th (TradersHuddle.com) - Shares of Yamana Gold Inc. (NYSE:AUY) ended the trading session higher by $0.27 or 1.58% from its previous close. Yamana's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Yamana Gold Inc. (NYSE:AUY) is a Canadian-based gold producer with gold production, development stage properties, expoloration properties, and land positions in Brazil, Chile, Mexico, and Colombia. Yamana prodcued 1.05 million of gold equivalent ounces (GEO) in 2010. It has 4 development projects in Mexico and Brazil, expected to add 440,000 GEO.

Yamana's recent stock range has been formed by a trough where calculated support was defined at $15.06 and by a peak that established the resistance level at $17.82, which could be used by traders planning their trades.

Traders wanting to establish a position in Yamana Gold or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: