Coiling

Coiling

March 6, 2018 Off By Chuck

BVN, a Peruvian mining company came back from the dead in January of 2016. After bottoming at $3.27 it rallied almost 400% in 8 short months. As you would expect after such an enormous run, it needed to take a rest, consolidating sideways for the last 17 months, allowing those wanting to sell the opportunity to do so. But after this long sideways journey, the selling is waning, price has formed a cup and handle continuation pattern and is coiling above its rising 200 day moving average. A confirmed breakout above the pattern’s neckline points to a target in the $22-3$23 range, some 40% higher.

Risk management is easily controlled as it would make no sense to hold on to the position if it closed below the prior low of 14.13. If you really wanted to give it more room, a break of the 200 day moving average would be my final exit point. Either way, the risk-reward ratio is well above the desired 3:1 target and as such provides a compelling opportunity.