Gediminas Jasionis
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Africa Oil Corp. (CVE:AOI) (PINK:AOIFF) Challenges Short Term Resistance

by Gediminas Jasionis Oct 16, 2011
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aoi_chart.pngAfrica Oil Corp. (CVE:AOI) (PINK:AOIFF) share price has secured position at the upper part of the short term trading channel but failed to gather enough buying pressure to break through resistance.

The stock price is still trapped in a trading channel despite the heavy trading on Thursday, but kept at the higher end of the range till the very end of last week.

AOI price appreciation stopped at the resistance of 1.45, which could lead to a swing back down. Thursday's 10 million trading volume was the second heaviest recorded over the year. Since the price didn't pass higher it means the resistance is quite strong.

There was no news recently thus the trading activity wasn't provoked, but it likely increased as the price approached a technically important level.

africa_oil_logo.jpgAfrica Oil's market cap of $310 million is just above their net tangible worth of $246.5 million, which means there is a lot of space for share price appreciation. Nearly half of their underlying assets consist of cash and their debts are comparatively small. This fact strongly supports the market cap from going below their net worth.

On the other hand the company is issuing a lot of capital stock, which causes a gradual decline is their share price over a longer period.

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