Colonial Coal International Corp (CVE:CAD) (PINK:CCARF) stock price reached out to the upper limit of its trading channel but didn’t manage to pass above resistance even with the help of somewhat positive news.
Price action produced a spinning top candle on Friday along with a gap up as it secured 5.4% increase in price. The situation is risky for the bulls because of such a technical line-up.
The gap might be exhaustion gap on the current uptrend and spinning tops are also a common sign of upcoming trend reversal. Basically, it means bear and bulls are in serious struggle for position and that is also depicted by the increased trading volume. Furthermore, the stock price was not able to break resistance at $1.55, which is yet another bearish sign.
379 thousand shares changed hands on Friday which was more than three times heavier than normal volume.
Some more controversy was induced by news. On November 3 Colonial announced to have executed a non-binding memorandum of understanding with Lax Kw’alaams Band and Metlakatla First Nations. Under the current agreement the companies might form a joint venture to collectively acquire Watson Island property in British Columbia. The company’s would-be partners already have an arrangement with the City of Prince Rupert to purchase the land.
According to the announcement, the definitive participation still remains a subject of further due diligence and management decision. That openly admits that the company might drop this idea anytime and the news only provide a heads up on what they are considering, not committing to.
