Like most energy juniors, Buru Energy (ASX: BRU) is no stranger to volatility, and if you know it from the 2011-12 run, you may remember the name.
Fast forward to 2021 and they’re drilling a new perspective again, and the price movement, as seen in the graphic below, speaks in favor of the idea that the market is paying attention.
A clear uptrend since last October, moves can be abrupt and prone to decent pullbacks, and the recent completion of a capital increase and related SPP sets the stage for the name to be self-trading for the next several months.
Speaking of which, the near-term target of 19.5c comes with the gap left on the chart from the price move in April.
The uptrend suggests that there is a reasonable chance of filling up.
As for support, the 200 day exponential moving average in light blue offered perfect support at 13.5 ° on May 10th.
A movement above the 50-day average for green brings this 19.5 ° C into focus and also a possible retest of 22.5 ° C.
Trading the sequence of messages associated with drilling a well can be a tricky business and therefore positions should be sized according to one’s own risk tolerance.
However, there is no compulsion to be there on the day the ultimate news arrives, and so in this case we look for the expectation to be our friend as we let price action guide us.
That said, we’re buying 16c, risking 13.5c and having an initial target of 19.5c in the coming weeks.
The macro backdrop is also widely seen as a favor for energy, as supply-side constraints may be underestimated relative to global demand as the reopening continues.
Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is an authorized corporate representative (# 1284431) of Sanlam Private Wealth (AFS License # 337927) providing general advice only.
Collette Capital only provides services to professional and experienced investors within the meaning of the Corporations Act, Section (s) 708 (8) C and 761G (7) C.
As of the end of May 2021, the Collette Capital Wholesale IMA strategy has achieved + 26.51% pa after deduction of all fees since it was launched in January 2015 (using the time-weighted return method to calculate the return).
Find out more at www.collette.capital
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