Yesterday, Avesoro Resources (LSE:ASO) reported it had achieved record gold production and cash flow during the last quarter. The Share price subsequently jumped to 294.5p on the news but fell back to close at 281p. Looking back at the chart, you can see the share price rose significantly after confirming it’s channel breakout at the beginning of April when I last highlighted the stock as a potential buy at 224p.
Avesoro has been consolidating over the past four weeks and has formed what looks to be a Pennant pattern. These usually resolve in a continuation of the trend, so in the case of Avesoro, a bullish move out of this current range should follow. The price action is currently in a quite a steep upward trend channel (shown in purple below) and continues to hug the 20 Day Moving Average (DMA). The Relative Strength Index (RSI) has cooled off, sitting at just over 60, which gives excellent headroom for a further move north, while remaining bullishly above 50. The combination of positive fundamentals, chart technicals and a potential revving-up of the gold price form quite a compelling cocktail for a drive forward in the stock price of Avesoro.
Author: Stuart Langelaan
Disclosure: The Author owns shares in the company mentioned above