Yamana Gold in a very Tight Range

Published on Wednesday, 11 January 2012 05:20 Written by TradersHuddle Staff

New York, January 11th (TradersHuddle.com) - Shares of Yamana Gold Inc. (NYSE:AUY) closed the trading session at $15.31 placing the price action in a very tight range, given that calculated support is set at $14.73 and the calculated resistance based on an algorithm of peaks and troughs is set at $15.51

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 stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Yamana's price action, as any movement outside its predefined range of $14.73 and $15.51 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $14.73 could spark above average selling. A tiered approach can be a good way to approach starting a position in Yamana's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.