Interactive Investor

Make or break time for this mining stock

2nd June 2021 08:46

Alistair Strang from Trends and Targets

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While a downturn is possible, there is a good chance of strong price recovery too.

Eurasia Mining

Sometimes, a throwaway comment can prove a little distressing. We last reviewed Eurasia Mining (LSE:EUA) six months ago, being pretty positive for its long-term future.

As is our habit, we completed the round-up with a single sentence: “To finish on an easy note, the price needs to fall below 26p to now cause utter panic.

Needless to say, in January this year the share price decided to explore what could happen if it dropped below 26p.

It hit a bottom at 14p and bounced, fairly unconvincingly, creating the sort of drama we dislike.

The immediate situation for this miner is a little scary. Presently trading around 24p, the price only needs to drill below 23.5p to enter a cycle where reversal to 19.5p calculates as very possible.

We'd hope for a rebound at such a level, if only due to the presence of the immediate red uptrend since the start of 2020.

However, we rather suspect the share price will attempt 14.7p in an attempt to scare investors silly and shake loose some shares. Given this level is marginally above the prior low, substantial hope exists for proper price recovery should this level make an appearance.

Importantly, and perhaps crucially, we calculate ‘ultimate bottom’ on this at 12p. This represents the level below which we can no longer calculate numbers. In most situations, should one of our ultimate bottoms break ,the share price remains trapped in a twilight zone, with everyone telling each other a miracle will surely happen.

This time we'll finish on a better note, thanks to the pretty contrived price movements visible against this share price. The entire scenario for reversal is perhaps just too obvious, making us suspect the converse may be just around the corner.

Any excuse to trade above 30p should be interesting, apparently capable of triggering recovery to an initial 41p. Visually, such an ambition makes a lot of sense. Our longer-term secondary calculates at 54p, an aspiration that is truly amazing, as it would take the share to price levels not seen for more than 20 years.

Needless to say, while we believe in our 41p calculation, we've considerable doubts about our workings which produced the 54p figure.

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 or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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.

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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