Johannesburg - Beer giant SABMiller is moving up again after moving sideways for the past six months. Its chart is currently giving two upside price targets for it.
SABMiller: Higher targets
Trend: Short term up. Medium term turning up. Long term up.
* After moving sideways since April, SABMiller has finally given an upside break-out above line 3, to confirm a large head and shoulders continuation pattern, which is a very bullish pattern. There are higher targets in place now.
* Its short-term stochastic oscillator (on top) is overbought, so a minor pullback will not be a surprise. But on a medium-term view the stock is cheap.
* Buy at current levels (particularly for the medium term).
* The first target (T1) is R538, based on the height of a wedge pattern (lines 2 and 3) projected up. Target 2 (T2) is at R565 based on the large head and shoulders continuation pattern. Therefore, while traders should be taking profits at T1, pullbacks will remain buyable all the way up, until T2 (R565).
* Keep your medium-term stop-loss as a close below line 2, that is below R489. (Note, line 1 support is R470). Short-term traders place it as a close below R496 for now. Once it trades up to R530, bring the stop to breakeven (entry price), so you can’t lose.
* Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za.