As soon as market sentiment improves somewhat, traders quickly piled back into those market outperformers.
Silver miner Fresnillo (UK:FRES) is one such instrument. Airtel Africa (UK:AAF) is another.
For the past year the Mexico-based precious metal miner had enjoyed a sterling run. Prices quadrupled from the £6 base price.
Along the way, Fresnillo’s fantastic bull run managed to conquer multiple resistance levels – resistance dating back all the way to 2011. Those peaks seemed to fade away pretty quickly, suggesting that most buyers of Fresnillo shares then had migrated to other stocks.
When silver prices pulled back earlier to around $45, Fresnillo was testing £20 level as support. That held firmly.
Silver’s speedy rebound north of the $50 level also propels Fresnillo back into vicinity of all-time price highs at around £26.
Will we see fresh highs here? Given its strong price momentum, £30 may be reached before the year is out.
Big bull runs tend to finish near massive psychological round number levels. Nvidia, for example, hit $200 before its recent consolidation.
In sum, as long as silver prices maintain its upward trajectory, Fresnillo should do well too. At the time of writing, Fresnillo is trading in the region of £25.
Before I end the post, lets take a quick look at silver’s chart.
For the past three weeks, the precious metal see-sawed around the $50 mark. Downward moves were notably limited. This forms, in chartist parlance, an ‘ascending triangle’ pattern.
Higher lows are always a positive development for a stock since it suggests accumulation.
Backed by bullish momentum, silver is likely to test the near-term resistance at $54.5. Should a breakout materialise, the next upside target is at $60.
