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Technical analysis: Remgro all set for upward price breakout

June 12 2012 at 05:00am

Remgro has been a bastion of stability amid the market turmoil of recent weeks. Moreover, its price appears to be consolidating before a bullish breakout. We show a target for it, once the breakout occurs.

Remgro – Price breakout imminent?

Recommendation: Prepare to buy

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

Strategy: Buy on a breakout above line 3.

n Remgro is currently moving sideways in an ascending triangle (lines 2 and 3). Ascending triangles typically break out to the upside.

n The price has moved up from line 1 support that goes back 10 months. It is testing line 3 resistance at the time of writing.

n The moving average convergence-divergence oscillator (on top) has broken its own resistance line (line 4), which is an early bullish sign.

n Buy it on a breakout and close above line 3 resistance (R135.75). More aggressive traders to buy if it pulls back to line 1 (R130.80) before the breakout.

n Once it breaks above line 3, it will activate a minimum target to R144, based on the size of the triangle (lines 2 and 3).

n Place your initial stop loss as close below R130. When it gets to R141, move your stop up to below R134.40.

Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, find further information on www.themarket.co.za.


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