Shoprite is one of the market leaders, and has been for many years. After moving sideways for most of this year it is heading higher again, and on its way to a higher target, thereby presenting a trading opportunity as the chart above shows
Recommendation: Buy pullbacks.
Trend: Up on all main timeframes.
Strategy: Buy on a close above line 4, or a pullback to line 3, or whichever happens first.
n After giving a decisive break out of a large wedge (lines 1 and 2) in early June, Shoprite is heading towards a higher target. It has pulled back over the past two weeks, which should be temporary, before it continues higher.
n The short-term stochastic oscillator (on top) is not yet oversold, and a bit more pullback is possible before it heads higher. The ideal scenario will be a bit more of a pullback to allow for a lower entry.
n Buy it on either a close above line 4 (R152.50), or on a pullback and reversal up from line 3 (R148.60). Do whichever happens first, but buying on the pullback will be preferable in this case, because it will allow for greater upside.
n The stock “minimum” upside target is R157.50, measured as the height of the wedge (lines 1 and 2) projected up.
n If buying on a close above line 4 (R152.50), the stop-loss will be a close below R150. But if buying on more pullback (if it happens), the stop will be a close below R145.50.
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, visit www.themarket.co.za for further information.