Chart of the week: is this silver miner set for more gains?

by John Burford from interactive investor |

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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.

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.  

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.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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