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“Quebec” and “Gold” are a powerful combination in the junior resource market right now.  Yesterday (Monday), BMR brought a little known, overlooked company (Excel Gold Mining Inc., EGM, TSX-V) to the attention of its readers, one that has been flying under the radar of most brokers and investors.  So too were Gold Bullion Development (GBB, TSX-V) and Sidon International Resources (SD, TSX-V) when we introduced them (GBB is up 671% and SD is up nearly 200%).

Excel came out with very interesting news yesterday which we’ll review in more detail tomorrow (Wednesday).  They are exploring and developing the Montauban Property (gold-silver-zinc-copper-lead), 120 kilometres west of Quebec City, which is a former producer and features near-surface mineralization with excellent potential for expansion of historical resources.  Surrounding Montauban, Excel has assembled a strategic land package of 130 square kilometres that it plans to vigorously explore.  Excel believes there could be an extension to the Montauban mineralized system.  Sound familiar?  Very similar, in that sense, to Gold Bullion’s Granada Property.  Montauban has different geological characteristics but the concept is the same – Excel is taking a fresh and aggressive approach to a former producer.  Lots of “blue sky” here.  Often the best place to find a new mine is near an old mine.  The “fresh approach” worked for Osisko (OSK, TSX) and it’s working for Gold Bullion.  And we believe it’ll work for Excel.

What also intrigues us a great deal about Excel is its phenomenal-looking chart.  One look at a chart and a stock’s technicals tells you a lot.  The volume surge in Excel this year is very bullish – we saw the same pattern with Gold Bullion late last year and also with Sidon.  Volume with a stock is key as John emphasizes below.

Tonight, BMR’s technical analyst updates the Excel chart after featuring it in Monday’s “Technically Speaking” article:

John: Today, Excel Gold Mining Inc. opened at 14.5 cents, its low for the day, and then climbed to close at its high of 17.5 cents on volume of 2.2 million shares for a gain of 17%.   This was a strong and beautiful trading day for EGM as it not only cleaned out underlying stock but it almost broke through the resistance band between 16.5 cents and 17.5 cents that was identified on the previous chart.

Looking at the 6 month daily chart we see that EGM continues to trade in an upsloping channel – the top blue line is resistance and the lower green line is support. Today’s close is at the top of the resistance band.  When this resistance is broken the next resistance will be the sloping blue channel line at 20 cents.  If EGM breaks through that, look out.

All of Excel’s moving averages are in bullish alignment.  The SMA(50) and the SMA(200) are both indicated on the chart with the SMA(50) providing strong support.   The Fibonacci levels are shown as thin horizontal blue bars and the current Fibonacci Target is at 25 cents.   Monday’s candle was a Gravestone Doji and today’s (Tuesday’s) was a strong white Marubozu which together form a “Bullish Engulfing” pattern.  This pattern alone gives a strong signal that we can expect very bullish trading for at least the next few days.

Looking at the indicators:

The RSI is above the 50% level at 63%, well below the overbought area, and has formed a “W” formation which is a strong indication for continued strength – very bullish. 

The volume, which some say is the most important indicator, exceeded 2.2 million shares today. Only on 3 previous occasions in the past 6 months has EGM’s daily volume exceeded 2 million.  Remember, volume in an uptrend is the engine, it provides the torque or force to take the stock to new highs. Never analyze a stock without reviewing the volume patterns – very bullish.

The Slow Stochastics shows the %K (black line) is above the %D (red line) with both climbing. They are well below the overbought region starting at 80% – very bullish. 

The ADX trend indicator has the +DI (green line) above the -DI (red line) and climbing.  The +DI is at the 33% level and climbing.  The previous +DI peak was around 45% so there is plenty of room to climb before anticipating a peak.  The ADX trend strength indicator is rather flat but at a strong level This is very indicative of strong but managed bullish strength. If the ADX climbs too fast then the exhaustion point is reached in short time and the trend reverses quickly.  The ADX line is above the +DI line which is above the -DI line to show a bullish orientation – very bullish.

Outlook: There is a lot of power behind this stock right now, and there’s no question that this is a great looking chart for both the immediate and long term.  The technicals are saying there is a fundamental change happening with this company.