Will Yamana Gold recover?

Published on Tuesday, 24 July 2012 05:24 Written by TradersHuddle Wire

New York, July 24th (TradersHuddle.com) - Shares of Yamana Gold Inc. (NYSE:AUY) closed the trading session at $14.07 below calculated support at $14.10. The stock broke down technically, raising concerns as the move might trigger additional selling.

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 was trading in a well defined range with support at $14.10 and resistance at $15.17; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective, it can be expected that previous support becomes resistance, as the new range gets defined. However, $14.10 will remain in focus as Yamana's price action places the stock near the broken support. Traders will be waiting to see if it can bounce back and return to its previous range.

Traders wanting to establish a short position in Yamana Gold can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $14.10. However, if traders want to build a long position, the best entry point to do so is when the price action takes the stock back to calculated support.