Romios Gold Res Inc (CVE:RG) (PINK:RMIOF) has gapped up on a perfect blue skies breakout adding more than 48% over the past three days and building a strong short term base for continuation.
There were no news to ignite the buying fury, so the best explanation is the technical reasoning – the uptrend is approaching exhaustion and these are the last kicks. It would’ve been most profitable to spot this a few days ago, but those wandering around can still profit if the price action allows it.
When trends break in such a manner, the first red day is an important indicator of reversal. Price can run up higher than anyone can expect and traders should feel comfortable getting on this wave when intraday action shows its uptrending. However, the first red day lures in shortsellers and, if short squeezes don’t shake them off on the first round, reversal becomes inevitable.
The last good news for Romios was back in late March when the company closed $1.3 million financing raising their book value to roughly $16 million. Still, the recent market value growth to over $74 million has clearly gotten out of hand. A price to book ration of 4.6 can hardly be supported by a startup miner with no income (they usually don’t top a P/B of 2), which also points out that the rally will likely be short lived.
