Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Mexico, Peru, Chile, and Africa. It also has interests in silver ores; platinum group metals, including palladium; other minerals comprising base metals, iron ore, coal, and industrial and miscellaneous minerals; and oil and gas properties. As of March 10, 2016, the company had 262 mineral assets and 78 oil and gas assets.
Take a look at the 1-year chart of Franco (NYSE: FNV) below with my added notations:
FNV has been trending consistently higher all year, and during that time the stock has formed a clear trendline of support (green). In addition, the stock has also created at 52-week high resistance level at $80 (red) over the past two months. At some point FNV is going to have to break one of those two levels.
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The Tale of the Tape: FNV has an $80 resistance and a trendline of support. A long trade could be made on a pullback down to the trendline, or on a break above resistance, with a stop placed below the level of entry. A break below the trendline could be an opportunity to get short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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