BOTTOM LINE: PIK has breached the neckline of its inverted head and shoulders pattern.
We had recommended a long in February when PIK confirmed a positive breakout of its long-term falling-wedge pattern above 6,590cps, and the target was situated at 7,690cps. Momentum became sluggish in April, but we suggested investors stay long as a potential bullish reversal pattern was in the making. PIK has breached the neckline of that pattern and has exceeded our first target at 7,690cps.
Now that the 3W RSI has corrected from a mega-overbought position and support seems retained at 7,340cps, we expect PIK to recover its losses. Go long above 8,425cps - PIK must overcome that resistance level to embark on a new bull phase. The first upside target is situated at 9,875cps.
A move through 7,340cps could see PIK retest support at 6,150cps.
Technical Analyst, Sharenet
Moxima has a B.Comm Finance from the University of South Africa and is a certified Chartered Market Technician Level 2, currently completing Level 3. She has been a technical analyst for 10 years, working for BJM, Noah Financial Innovation and for Standard Bank as part of the Research Team in the Treasury Division of CIB. She now runs her own business, The Money Hub, and consults for Sharenet. Moxima has been rated as one of the top 5 technical analysts in South Africa and outperformed the market during the recent recession. She regularly makes an appearance as a guest on CNBC Africa and writes often for Finweek and Sharenet’s Views.