Views Article – Sharenet Wealth

Share Picks, South Africa

Kumba Iron Ore Ltd: Our Target Should Be Tested Soon

BOTTOM LINE: KIO has broken out of its long-term bear trend

(click image to enlarge)


Trade Kumba from 0.3%

Possible scenario:

KIO remains bullish after our long recommendation in November last year, and it confirmed a positive breakout of its inverted head and shoulders pattern above 13,300cps. A few weeks ago it encountered major resistance at 22,635cps and pulled back. Having bounced on the support trend-line of its current uptrend and regaining its losses, yesterday KIO overcame that major resistance level at 22,635cps.

Investors should stay long, and because the 3-week RSI is not overbought yet, we foresee further gains to the inverted head and shoulders target situated at 25,835cps in the near term.

Alternative scenario:

Close positions on a reversal below 15,260cps, as the current uptrend would end. A downside to – and possibly through – 13,300cps could then ensue.

Technical Analysis helps turn information into investments.

As you can see from the article above, the strength of technical analysis lies in its ability to measure probabilities, identify high-confidence ’buy’ and ’sell’ signals, and minimise risk. When used correctly TA is a powerful tool that can radically change the way you trade.

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Moxima Gama
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.

Read an interview with Moxima, or discover Moxima’s trading insights via Sharenet’s Technical Analysis Newsletter.

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