From the high of about $4.50 (A), Nevsun declined toward $1 (B) and then settled into a base building pattern in the form of an inverse-head-and-shoulder formation (dashed lines). A rise above such a pattern usually produces significantly higher targets. The recent move to $3.66 (C) took Nevsun above the descending trend line (dotted line), signalled a breakout from the bullish technical pattern and confirmed the start of a new major up-move. Only a sustained decline below about $2.50 would reverse the long-term positive status of this stock.
Point & Figure measurements provide an initial target of $4.50 (a 42-per-cent appreciation from current levels). The large inverse head-and-shoulder formation (dashed lines) supports higher targets.
Ron Meisels is a contributor to the www.NA-marketletter.com web site. Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary.
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