The odds seem to favour the FTSE 100 stock rising again, after impressive increases earlier in the year.
I last covered FTSE 100 silver miner Fresnillo (LSE:FRES) on 3 August, which followed my 6 April ‘buy’ note at around £7. And in August, after a vigorous rally phase, I suggested taking some profits at around £12 for a tidy 70% gain.
Since then the share price has been in a consolidation phase as it digested the previous gains. This occurred around the important Fibonacci 50% retrace of the big wave down off the July 2016 high at £20 to the March corona crash low of under £5.
That is where I started to get very interested in it as a candidate for my ‘buy low, sell high’ list, as recounted in my April post.
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Since August, the share price has moved between the £11.50 and £13.80 levels and now appears to be poised for an upside breakout away from the Fibonacci and green trendline support.
Source: interactive investor. Past performance is not a guide to future performance.
Recall the lovely wedge formation from earlier posts – a stand-out pattern that should dominate coming proceedings in the weeks and months ahead.
As we know from the many examples of wedges I have shown in previous articles, a major target when coming up out of a down-sloping wedge is the high of the wedge.
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In this case, it is the £20 region. Of course, higher targets are then possible thereafter, but that is the minimum expectation.
But if an unexpected hard break below the green support line at around £11.50 should occur, I will be back to the drawing board.
For now, odds very much favour a resumption of the uptrend.
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John Burford is the author of the definitive text on his trading method, Tramline Trading. He is also a freelance contributor and not a direct employee of interactive investor.
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