The Peruvian precious metals company engaged in the mining and exploration of gold, silver, and other metals, Compania de Minas Buenaventura SAA (NYSE: BVN) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern with high volume. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – BVN
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
#3 Bullish Stoch: The %K line (blue color) is currently above the %D line (orange color) in the daily chart, indicating possible bullishness.
#4 Above MA: In the daily chart, the stock is currently trading above its 50-day SMA. This implies that the bulls are currently in control.
#5 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and the ADX line are currently above the -DI line. The ADX line is also moving higher from below the +DI and -DI lines. All these are possible bullish signs.
#6 Bullish Stochastic: The weekly chart also shows that the %K line is above the %D line in the stochastic. It is also moving higher from oversold levels. This indicates that an upmove may be imminent.
Weekly Chart – BVN
#7 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well, since the +DI line is currently above the -DI line and the ADX line has started to move higher from below the +DI and -DI lines.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BVN is above its near-term resistance level, which is marked as a purple color dotted line. This translates to a price of around $12.00.
TP: Our target prices are $15 and $18 in the next 4-6 months.
SL: To limit risk, place stop-loss at $10.30. Note that the stop loss is on a closing basis.
Our target potential upside is 25% to 50% in the next 4-6 months.
For a risk of $1.70, our target rewards are $3.00 and $6.00. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the breakout level of the falling wedge pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
— Tara
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