National Property Portfolio on Auction

National Property Portfolio on Auction
Loading

Technical analysis: Woolworths prepares to recover

February 12 2013 at 08:00am

Comment on this story

Colin Abrams

After a sharp month of declines in January, retail stocks such as former leader Woolworths are attempting a comeback. Woolworths itself has given an upside breakout and is pointing to a higher target.

Recommendation: Traders buy or re-enter.

Trend: The short-term trend is technically down, but improving. The long-term trend is up.

(Daily)

n After falling sharply over the past month, Woolworths found support near its long-term support line (line 1) as well as its rising 200-day moving average.

n It has bounced back to form an inverse head and shoulders (labelled S-H-S). It has closed above line 2 (the neckline) to confirm this pattern.

n The daily relative strength index (on top) has higher to go before becoming overbought, after giving a positive divergence at its recent low (a bullish sign).

n Traders buy or re-enter for a rally to R72.90, based on the size of the inverse head and shoulders. This target will also retest its December highs. There is potential thereafter to make a new all-time high.

n Traders place your initial stop loss as a close below R63.

n From R71, tighten your stop for example to a prior two-day low, to protect profits.

Colin Abrams is an independent technical analyst. For more information see www.themarket.co.za.


sign up
 
 

Comment Guidelines


  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

     

Join us on

 IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks
IOL Travel

Make sure you find the best available airfares with our easy-to-use search engine.

Travel_pic_enw
Sudoku