Falcon Oil & Gas Ltd. (CVE:FO) (PINK:FOLGF) appears to be committed to retain the post-breakout price level, even though it mostly manifests through increase in trading volume, not the price changes.
Profit taking is naturally a part of this breakout, but sellers weren’t able to move the price down yet, providing a further appreciation could happen. Liquidity is an issue at this point, as the price movement is mostly choppy and poses additional risk for intraday traders. Currently its stuck at another resistance at $0.19, which migh lead to consolidation in the 17.5-19 cents channel.
The long term perspective for the stock is shrouded in mystery. Even though traders get short term price bursts, the stock appears to lack public interest. Under the current prices, the market cap is far below the net tangible worth, and yet the there is not enough buying to drive it higher.
Small revenues and heavy losses are part of this, as millions in quarterly write-downs require a lot of additional capital. Offerings in units of stock and warrants create a ceiling for the share price growth. The latest funding round of more than $63 million was done by offering units at 15 cents per piece, with warrant conversion possibility at 18 cents. It is unlikely the share price will stay above this drawn level for long, since it may trigger heavy selling.
