Endeavor Mining share price rally at risk as a rare pattern forms

Endeavor Mining (LON: EDV) share price has staged a strong comeback during the ongoing banking crisis as gold prices continue rising. The stock jumped to a high of 1,886p, the highest level since February 10. It has soared by over 20% from the lowest point this year.

Gold prices boost mining stocks

Endeavor Mining stock price has made a strong bounce as investors focus on the rising gold prices. Gold, which is often seen as a safe haven, jumped to a high of $2,010, the highest point since the global pandemic. It has jumped by over 9.41% from the lowest point this year.

Like other mining companies, Endeavor makes more money when their primary commodity is rising. This explains why oil and gas companies like Shell and BP did well in 2022 as crude oil prices soared to the highest point in years.

Endeavor Mining, which mines gold in west African countries like Ivory Coast, Burkina Faso, and Senegal, has seen the volume of production continue rising, The most recent results shows that the company produced 355 koz of gold, higher than the previous quarter’s 343 koz. This production was nonetheless lower than the 378 koz that it produced in the same period in 2021.

Its operating cash flow came in at $311 million, lower than the previous $341 million while its EBITDA came in at minus $110 million.  Its cash jumped from $906 million to $951 million. Therefore, analysts believe that the rising gold prices will help to boost its income.

Another catalyst for Endeavor Mining stock is its plan to buy Boungou and Wahgnion mines. These purchases will help the company boost its production and reduce its overall costs. In a recent note, analysts at Canaccord Genuity said:

“Endeavour remains one of our top picks among the senior gold producers, based on its fully funded growth profile, coupled with strong execution, a strong balance sheet and capital return program, and inexpensive valuation.”

Endeavor Mining share price forecast

EDV stock by TradingView

The daily chart shows that the EDV share price has been in a strong bullish trend in the past few days. The stock has jumped above the 50-day and 25-day exponential moving averages (EMA). However, the shares have formed what looks like a shooting star pattern, which is characterized by a body with a long upper shadow and no lower one.

Therefore, there is a likelihood that the stock will pull back in the coming days as sellers target the key support at 1,750p. A move above the key point at 1,880p will signal that there are still more buyers left.