Savannah Resources (LON: SAV) Wedge Formation Breakout Suggests April Resistance Retest of 8p Initially
As is very often the case after sharp rallies in small cap stocks, it can take some months before the dust settles and a new buying opportunity is served up. This is certainly the case as far as Savannah Resources is concerned in terms of the wind down from the March peak towards 14p this year, a pullback which made a sub 4p floor from May onwards. During that time we have seen the stock generally offer a range between 4p-5.5p, and remain loyal to a wedge formation in which the key component is a resistance line running at 4.52p. What has been interesting to end this week for shares of Savannah Resources is first the Wednesday close right on the May resistance line, followed by a sharp clearance of this feature during the next session. This would suggest that at least while there is no end of day close back below the May line in what could be a significant turnaround situation.
In terms of what the upside may be here the momentum provided by an extended RSI support line in the oscillator window which has been multi tested and now at the 35 level, we should be treated to a return to the April resistance zone at 8p plus as soon as the end of October. Only cautious traders might wish to wait on a clearance of the 200 day moving average rising at 5.6p before pressing the buy button.