Chart of the Day: Viking Mines contests resistance levels, leans towards upside
Link copied to
Last week we talked spot gold, and since that time gold has largely held at US$1900/oz – which is a welcome consolidation given the straight-line drive from levels below US$1700/oz at the start of April.
This week we look at Viking Mines (ASX:VKA) – which has joined stellar price action since acquiring Red Dirt Mining at the end of 2020 – and has now returned to desirable levels for those looking on the long side for a micro-cap with true exploration potential.
As can be see in the below chart, the stock enjoyed a fantastic move higher in the back end of 2020, culminating in a blow-off top to levels above 5c at the start of 2021.
As speculative money moved elsewhere within the ASX as the new year progressed, the stock rolled back toward lower levels, and has now spent the best part of a month consolidating levels in the order of 3c.
The simple 200-day moving average has been providing some close support during this consolidation as seen in red, and the exponential 200-day moving average in light blue is also now coinciding with the same levels.
The 15-day has wound into similar levels also.
When averages coincide in this fashion it does increase the likelihood of a significant move in either direction.
Provided 2.8-2.9c can hold, with plenty of drilling results to come, an undemanding market cap in the order of $30m, and recent price history at meaningfully higher prices, we expect this chart to resolve to the upside.
A move higher would target 4c as initial, and beyond that, a look at 5c is plausible.
For those that want to play a tight stop, 2.8c needs to hold.
To that extent, the IMA has commenced to own this stock, and looks forward to the next few months as potentially defining for this particular venture.
Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.
Collette Capital only makes services available to professional and sophisticated investors as defined by the Corporations Act, Section (s)708(8)C and 761G(7)C.
The Collette Capital Wholesale IMA Strategy has returned +26.51% p.a. net of all fees as at the end of May 2021 since inception in January 2015 (using the Time Weighted Return method of calculating returns).
Learn more at www.collette.capital