Faron Pharmaceuticals: Making sense of crazy price action

by Alistair Strang from Trends and Targets |

After predicting its amazing rally, our chartist has another look at this highly volatile AIM stock.

When we last reviewed Faron Pharmaceuticals (LSE:FARN), we promoted a scenario for a 25% rise. The move successfully happened in May and in the period since, it has more than doubled! Thankfully someone emailed to remind us this was urgently due a big picture update.

This one is extremely difficult to map thanks to a bunch of quite separate calculations. When we now refresh our numbers, the share price has quite several distinct formula, all pointing at a high of 276p. The other day, it bettered this level, achieving 277.5p. It has created the situation where we should anticipate price movement now exceeding 258p to provoke yet another surge, this time in the direction of 319p.

Above 319p and things get a bit vague but we can calculate a high of 392p and no further. Unless, of course, if goes higher and in which case, we shall need review the tea leaves again!

The price certainly received an absolute hammering, once it hit the 277p level. Reversing to 150p within the same session really was not fair and now, has created the situation where weakness below 180p threatens reversal to 130p initially.

If broken, secondary calculates at 81p. We're not convinced it is on the edge of doom, instead suspecting whatever drove the amazing rise has seen some sanity enter the conversation.

Regardless, by any standards, we're fairly optimistic for this lot's longer term future and dreading, once again, how to handle things if it indeed approaches the four quid level.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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