Shares of Alien Metals Ltd (LON: UFO) are down 21.9% this year despite a series of positive announcements from the mining company, yet the shares have trended lower. Are the company’s shares ready to rally?
The mining company focuses on early-stage or brownfield projects. It then develops and advances them through the value curve. It has a series of projects that include the high-grade Brockman and Hancock Ranges iron ore projects and the Elizabeth Hill silver projects in Western Australia.
Alien Metals recently entered into a 60-day exclusivity deal with Wombat Resources Pty Ltd, which owns historic tailings within its Elizabeth Hill high-grade silver project. The company intends to assess the tailings in situ before potentially acquiring rights to the tailings from Wombat.
The company announced on March 1 that drilling activities had started at its Donovan 2 copper and gold project located in Mexico. Yet, its shares have been stuck in the range outlined in the weekly chart below since December 2020.
Most investors wonder what it will take for Alien Metals shares to rally higher, which nobody knows, but the technical picture looks very promising.
Alien Metals shares fell heavily after the October parabolic rally and have been trending lower since then. The shares have now formed a balancing zone on the weekly chart represented by the trading range highlighted below.
Technical balancing zones are typically followed by a breakout that could initiate either a bullish or bearish trend. I’m betting on a bullish breakout given the company’s positive fundamentals, but we all know that nothing in the markets is guaranteed.*
A break below the support level could usher in a new downtrend, invalidating the above trade idea.
*This is not investment advice.
Alien Metals share price.
Alien Metals shares are down 21.9% this year and have formed a sideways trading range. Is it time for a rally?
Should you invest in Alien Metals shares? Alien Metals shares are traded on the AIM market of the London stock exchange (the alternative investment market) which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Omega shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
