Gold share breakout is a strong possibility

GOLD shares, as seen by the JSE gold index, have been in the doldrums in recent months. However, there is now the potential for an upside breakout in this index, as shown on its chart.

JSE GOLD INDEX – Breakout potential.

Recommendation: Buy a breakout.

Trend: Down since April, but sideways this year.

Despite falling in recent months, the JSE gold index looks to be stabilising right now after finding support at its March low.

A breakout and close above its red line (resistance) at 1 300 will be a buy signal for gold shares.

The minimum target then will be 1 395, with further potential to 1 480. Gold Fields is the strongest of the gold shares at the moment, and is the preferred pick.

But protect your trade by selling if this index closes below its recent low (1 165).

Colin Abram an Independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www. themarket.co.za