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Technical analysis: Reinet moving up

April 17 2012 at 05:00am

Investment company Reinet has performed solidly albeit unspectacularly. Its share price seems to be on the move again after breaking out of two chart patterns. We see upside targets for it.

Broad recommendation: Buy a pullback

Trend: Up, on all main timeframes.

Strategy: Buy, ideally near R13.85.

(daily)

Reinet recently broke out of a symmetrical triangle. It has a higher target from that pattern.

In so doing, it appears to have confirmed a much larger “failed” head and shoulders pattern, which is a very bullish pattern. The short-term stochastic oscillator can pull back a bit more before it rallies again, from an oversold level.

Traders buy it ideally on a minor pullback to R13.90-R13.85. A more conservative (safer) entry will be on a closing price above R14.15.

In terms of upside potential, target one is at R14.45, a “minimum” target based on the triangle. Traders take at least half profits there. Continue buying short-term pullbacks. Medium-term players hold up to target two at R15.10.

The short-term stop-loss is a close below R13.70. In the medium term, keep your stop below line 1 (that is, a close below R13.45).

Colin Abrams is an independent technical analyst. To subscribe to more recommendations or attend courses, please go to www.themarket.co.za


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