Short term
Trade view / 04 May 2016 at 7:54 GMT

South Africa's Shoprite, Investec hove into view

Head of Private Sales / Saxo Capital Markets - South Africa
South Africa
Instrument: SHP:xjse
Price target:
Market price:

Background

Both South Africa's Shoprite Holdings and Investec have triggered indicators that could see them both break out in the near term. We look at each separately here.


Shoprite

Background

The exponential moving averages have crossed over to the upside at Rand 169.98, which could signal a potential continuation of the upward trend. In stochastics, a recent crossover shows potential for further upside, although some divergence is present. A formation of a declining wedge and a high wave candle shows potential of a break above R174.50, provided we see candles with positive and convincing days to the upside.

Management and risk description

Daily ranges have been on the decline and is currently at R5, showing volatility in the stock is slowing and a low risk potential stock with a risk:reward ratio of R5:10 from the current price. 


Parameters


Entry: R165-170.

Target: R1.74.50, R180

Time horizon: short term.

SHP could be set for a break

j



Source: Saxo Bank


Investec


Background

Investec stock has tested R112 three times over the last 5 months and not managed to move higher. Momentum is being tested with higher volumes to the downside, given the below technical events. The Exponential Moving Averages have not crossed over and currently testing the 21-day EMA, while trading below the 10-day EMA, potential break of moving averages to the downside.


Stochastics are currently above 80 with a crossover toward downside potential, no divergence present. Volume over the last three trading sessions has seen higher than normal average volumes supporting current downside pressure.

The chart shows a gap in price just below R105 which is a potential support level, with triple tops highlighted on the graph.


Management and risk

The risk and volatility is relatively low and a good R2.50:R5 risk to reward ratio for stop and take profit limits.

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Source: Saxo Bank


— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more

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