Technical analysis: Harmony seeks low-end base

Comment on this story

Johannesburg - The chart of Harmony Gold is a great example of the benefit of using technical analysis for long-term investing. Harmony has reached its long-term downside target and is showing signs of basing. This action will be of interest to investors.

Harmony: Trying to bottom.

Investment strategy: Wait for a buy signal.

Long-term trend: Technically still down, but improving.


- Harmony remarkably reached its downside target from a massive symmetrical triangle (lines 1 and 2), which broke down below line 1 in August 2012. (The price at the break down was above R70, and the target was to R25).

- Since reaching that target last year it has been consolidating, in what looks like an inverse head and shoulders (labelled S-H-S?). It needs to close above line 3 (R40.50) to confirm this new bullish pattern.

- Investors should buy if it gives a monthly close above line 3 (R40.50). That will set up a minimum upside breakout target (labelled B/O) of R68.40, and more than likely higher. For example, it could go as high as the R100 level.

- Stop-loss once that breakout occurs will be a monthly close below R30. (A monthly close is the closing price on the last trading day of any particular month).

* Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, go to

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.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines