Why an Explosive Move in CDE Stock Is Now on the Horizon

Coeur Mining Stock
iStock.com/CreativeNature_nl

CDE Stock: The Wheels Have Been Set in Motion

The wild roller coaster ride that has characterized 2018 continues. The markets are experiencing elevated levels of volatility, which is responsible for the wild swings that the markets are currently enduring.

These wild swings are the markets’ way of trying to come to grips with a number of market-moving events, ranging from the notion of higher interest rates to a potential trade war—and now an actual war.

These are uncertain times, and in times of duress, investors seek safety. The last time I can recall an environment that resembled anything like this one was in the 1970s, where inflation and a cold war were taking center stage. Looking back at that era, the precious metals sector is where investors turned for safety, and as a result, this sector performed extremely well. This is one of the reasons why I am currently focusing on Coeur Mining Inc (NYSE:CDE) stock.

The precious metals sector is very compelling at the moment, but the main reason why I am currently focusing on Couer Mining stock is that the price action on the CDE stock chart is suggesting that a very explosive move is on the horizon.

This notion of an upcoming explosive move is a direct result of the technical price pattern highlighted on the following Coeur Mining stock chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the CDE stock chart is a symmetrical triangle pattern. Symmetrical triangle patterns develop when the price action is characterized by a sequence containing a series of lower highs and higher lows.

Identifying these patterns is simply done by connecting the sequence of higher lows and lower highs using two converging trend lines. These trend lines act as levels of price support and price resistance, and this price pattern is resolved when one of these trend lines is broken.

The converging nature of support and resistance is why triangle patterns are particularly powerful. This phenomenon causes energy to build within the pattern as it develops, and this energy is finally released when the stock price exits the pattern.

On April 11, 2018, Coeur Mining stock exited the symmetrical triangle by breaking out above resistance, and this breakout is now suggesting that a move toward higher CDE stock prices is expected to follow.

The repercussions of the completed triangle are magnified when taken into context with the price action that preceded this pattern.

The following Coeur Mining stock chart illustrates the price action that preceded the completed symmetrical triangle.

Chart courtesy of StockCharts.com

This stock chart illustrates that CDE stock has been in a bearish trend since the stock peaked in August 2016. The price action has been characterized by a sequence of lower lows and lower highs.

This bearish trend was captured using a downtrend line that was created by connecting the sequence of lower highs that characterized this bearish trend. This downtrend line represents a dynamic level of price resistance, and thus far, it has thwarted every attempt to move beyond it.

The completed symmetrical triangle, which is just the tip of this bearish trend, is suggesting that a break above the downtrend line is almost assured. Such an event will negate all the bearish implications suggested by the downtrend line, allowing Coeur Mining stock to finally appreciate.

Once again, the ramifications of such an event are magnified when taken into context of the price action that preceded the bearish trend, which is highlighted on the following CDE stock chart.

Chart courtesy of StockCharts.com

This CDE stock chart illustrates that the price action since January 2016 has been constructive in nature.

Constructive price action is responsible for creating and sustaining a bullish trend, and it consists of a wave structure containing impulse waves and consolidation waves.

The wave highlighted in green is an impulse wave, and these waves are advancing in nature. Impulse waves capture the stage in a bullish trend when a stock price makes a sustained move toward higher prices.

The wave highlighted in purple is a consolidation wave, and these waves are corrective in nature. Consolidation waves capture the stage in a bullish trend when a stock corrects and refrains from advancing. Corrections are a very important part of every bullish trend because they create the necessary conditions so a new advancing impulse wave can follow.

The downtrend line has outlined the level of resistance that has defined the consolidation wave. Breaking above resistance will imply that the consolidation wave is complete and that an impulse wave is therefore likely to follow.

The new advancing impulse wave should mirror the magnitude of the impulse wave that preceded the consolidation wave, suggesting that a substantially large move toward higher Coeur Mining stock prices is on the horizon.

Analyst Take

I am bullish on Coeur Mining stock because the implications of the completed symmetrical triangle pattern should set the wheels in motion where a number of technical indications are going to be generated, which will suggest that much higher CDE stock prices are on the horizon.