Shares of Eurasia Mining plc (LON: EUA) are down 18.8% this year despite making several positive announcements since January, such as the approval of its West Kytlim definitive feasibility study in Russia.
The last time I covered the company, its shares had formed ascending triangle pattern indicating that a bullish breakout could be on the cards, but this did not happen. Instead, the shares broke out of the triangle to the downside and headed lower.
The mining company’s shares are now trading sideways within a larger trading range and seem to have bounced off the 24p support level shown in the daily chart below. Still, the technical picture is neither bullish nor bearish, given that the price is in the middle of the range.
Eurasia Mining has a significant drawback in the form of its pending sale. Since last year, the company has been looking for a qualified suitor but is yet to get a firm offer.
The miner is in a weak negotiating position, which is the primary reason behind the decline in its stock price. The shares could rally significantly after a firm offer is announced, indicating that the company could soon go private.
In the meantime, investors could play the short-term price swings by buying at the bottom of the trading range and selling at the top.
Eurasia Mining recently appointed Tamerlan Abdikeev as a non-executive director and the head of its Japan office, showing its focus is on growing its business.
The current setup does not have an excellent risk to reward ratio, and I am staying away from the company until the situation changes or we get some news regarding its search for a suitor.
Investors interested in trading the shares should buy at the bottom of the range and sell at the top.*
*This is not investment advice.
Eurasia Mining share price.
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