Buy signal ahead of drilling activities for gold play Stratex? (STI)

Stratex International’s (LSE:STI) share price is still in the doldrums after infighting between its old board and shareholders disrupted the company last year. Since then, Stratex has brought in new directors including CEO Tim Livesey and fine-tuned its exploration focus.

With a drilling commencing at its Dalafin asset and a successful fundraise under its belt, raising £1.15m, Stratex may draw back some the volume of interest.

Today’s share price is just 0.43p to buy, a decent discount to the placing price of 0.5p. Chartwise, the stock has been in a steady declining price channel since the summer of 2016 – it’s once again reached the bottom of this channel. The chart shows a well-defined falling wedge (red) which often plays out to be a bullish reversal pattern. Targets on a successful breakout are usually at least the same height as the wedge – that is indicative of around 1.1-1.2p which coincides with the mid-line of the current price channel. There is a horizontal resistance line just over 1p too. The Relative Strength Index (RSI) is on its knees, also indicating that a bounce could be imminent.

Stratex is a gold exploration play, and is therefore not without its risks, particularly with regard to future funding, however, technicals indicate this might be an opportune time to consider a position ahead of expected newsflow.

Author: Stuart Langelaan

Disclosure: The Author owns shares in the company mentioned above

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