Technical analysis: Group Five is construction stock breaking long bear trend


Colin Abrams

An interesting development is taking place in several JSE construction stocks. One example is the chart of Group Five, which has finally broken its five-year bear trend. It now has two higher targets in place.

Recommendation: Buy or accumulate on pullbacks.

Trend: Short and medium term up. Long term technically sideways.

(Weekly chart)

n Group Five has broken out of two significant chart patterns. The first is a large falling wedge (lines 1 and 2). The second is a double-bottom pattern (as labelled).

Each pattern has a higher target. Target 1 is to R48.50 (based on the double bottom). Meanwhile, target 2 is slightly higher at R52 (based on the large wedge). The price at the time of writing was R35.50.

n Therefore, there is still good upside potential here over the medium and longer term.

n In the short term, the price is overbought. But any pullback will be temporary.

n Medium-term players should start buying now. And use any pullback to line 3 (R31.95) or lower to add to medium-term holdings.

n The medium-term stop loss should be kept relatively wide for now as a weekly closing price below R26.

Colin Abrams is an independent technical analyst. To subscribe to more recommendations, or attend courses, see

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