We have covered Avesoro Resources (LSE:ASO) on ValueTheMarkets a couple of times this year. The gold producer recently acquired two additional mines in Burkina Faso, ramping the company’s output from 70,000-80,000 oz to an expected 200,000 oz per year. While there has been some movement in the share price since its early year lows, that was largely regaining ground lost before the acquisition news dropped.
Avesoro has been in a down trending channel for the past 12 months but broke out in February. It’s since tested the top of the channel eleven times to date and remained above it. There’s been a slight price decline during this consolidation and testing period, but importantly the Relative Strength Index (RSI) has been cooling off ‘relatively’ faster – a good sign, and the very point of the indicator. I’ve marked a point when the share price was the same as today’s around six weeks ago for comparison. Now there is considerable headroom in the RSI for an upward move.
Another positive factor is that the price now is now above its 200 Day Moving Average (200 DMA) and the recent Golden Cross, where the 50 DMA passes above the 200 DMA is another thumbs up for bullish sentiment. First resistance to clear is 240, followed by 280 which will firmly place Avesoro in an upward trend.