REVERSAL Idea - Capitec Bank - first down to R2400 then up 2900Broadening Pattern has formed with Capitec.
When this pattern forms it bounces between ranges.
Right now it bounced off the top of the range, and is most likely to come down 50% from the most recent rally.
Once it comes down to a target of R2,400 then it could consolidate move sideways and then breakup to the next target at R2,900.
This is a little different from breakout trading, but I was asked for an analysis around this.
Capitec
Capitec Vuvuzela with bullish bias & strong fundaments to R2,485Capitec has been in this Broadening Pattern (Vuvuzela) formation since November 2023.
It breaks into higher highs and lower lows. But the overall momentum and trend channel is up.
It will continue trading in this range until we get a breakout of the resistance or support. My bet is it will first trade to the top of the range at R2,485.92.
Capitec has always been the outlier compared to the other banks with very little correlation. WHen it does well, it runs up regadless what the bigger banks are doing.
Also fundamentally, it doesn't seem to follow suit with the Big 5.
Firstly, Capitec announced a substantial 15% growth in headline earnings, which reached R9.7 billion.
This increase was driven by growth across various sectors of the bank, including a notable 124% profit surge in its business banking sector and a significant increase in net lending, investment, and insurance income
Also, Capitec has been actively investing in innovative digital solutions and client rewards programs, which have contributed to its strong performance.
They introduced a variety of digital payment solutions like Apple Pay, Samsung Pay, and Google Pay with zero transaction fees, as well as their own secure online payment tool, Capitec Pay.
So ye, big up to an innovative unclipped wings bank like Capitec.
Capitec fakeout and waiting for conservative buy levelWe saw Capitec form a W Formation. The price broke above the neckline and then made a fakeout.
Now it will be testing the uptrend support line before further upside to come.
I am bullish cautiously, but we still need the demand levels to pick up.
The target will then be R2,485.00
Capitec C&H ready to rumble to R1,853Cup and Handle has formed on Capitec's Daily chart.
We've had a disappointing 12 months with banks and its downside.
And today, the price opened above the Brim Level. This means, the buying and demand is more likely to take the price higher.
Other indicators confirm:
7>21 - Bullish
Price<200 But price is heading to the 200MA
RSI>50
Target R1,853.
SMC
Sell SIde Liquidity Below the C&H. You can see previous wicks touching the Order Block and then the price rallying. That's Smart Money buying up and sweeping selling from retailers.
Only concern is the current downtrend, which is still intact. We need the price to break above, for the confirmation to really get this going.
ABOUT THE COMPANY
Founded in 2001:
Capitec Bank was founded on 1 March 2001 and has its headquarters in Stellenbosch, South Africa.
Retail Focus:
The bank primarily focuses on providing retail banking services, such as savings, payments, and lending products.
Innovative Business Model: Capitec was one of the first banks in South Africa to operate on a branch-based model rather than using separate branches for personal and business banking.
Digital Banking:
Capitec offers innovative digital banking services, including internet banking and a mobile banking app, which has won several awards.
Affordable Fees:
Capitec is known for its relatively low banking fees compared to other South African banks, which has contributed to its popularity.
Unsecured Loans:
Capitec was one of the first banks in South Africa to offer large, unsecured loans.
CapitecGiven the sector's weakness, it's no surprise that JSE:CPI chose the downside.
The FX:USDZAR , US regional banks, load-shedding, political uncertainty (South Africa is a political stable country but we choose to entertain the politicised media), add whatever excuse you want but the banks are weak.
CapitecJSE:CPI seems to have topped in April 2022 and has been moving downwards since then. The stock enjoyed support near R1600 twice, the recent rally came to a halt as the price reached the trend line. Also, JSE:CPI is trading below declining moving averages; waiting to see how long the R1600 - R1500 level is going to hold.
Other banks are either declining or moving sideways, it's possible that the banking sector is weak.
Capitec showing strong upside since break in downtrend to R2040Cup and Handle formed on Capitec since it broke above the Downtrend.
Now that the price is above the brim level shows strong momentum up.
Indicators also confirm upside
7>21
Price<200 but moving back to it's elastic equilibrium level
RSI>50
Target R2040.00
ABOUT THE COMPANY
Capitec was founded in 2001 and is headquartered in Stellenbosch, South Africa.
The bank has over 15 million clients as of 2023, making it the third-largest bank in South Africa by number of customers.
Capitec offers a range of banking products, including savings accounts, personal loans, credit cards, and insurance.
The bank is known for its simplified and transparent fee structure, which includes low transaction fees and no hidden costs.
Capitec uses advanced technology to provide its customers with a seamless and convenient banking experience. The bank has a mobile app that allows customers to manage their accounts, transfer funds, and pay bills.
Capitec long position looking goodWe entered a long on JSE:CPI based off of the crossing of the EMA's and the turning up of the stochastic and the MACD. The trade is looking good so far with it being about a 3rd of the way to the target at 1925. It may find a bit of resistance at the current level, but I think we can potentially see a nice profit at the target if this momentum continues.
Capitec showing strong downside to come to R1,528Inverse Cup and Handle formed on Capitec and the price has just been on a strong downside trend for the last year.
We had a break below the brim level with indicators showing strong negative divergences.
200>21>7
RSI>50 - Mixed
Target R1,528
ABOUT THE COMPANY
Capitec is a South African retail bank that was founded in 2001 and is headquartered in Stellenbosch, Western Cape.
The bank has been recognized as one of the fastest-growing retail banks in the world, with over 16 million customers as of 2021.
The bank offers a range of low-cost products and services, including savings accounts, loans, and insurance.
In 2017, Capitec was named the best bank in the world by the Lafferty Global Awards, which recognized the bank's focus on customer service and its commitment to financial inclusion.
The bank has a market capitalization of over ZAR 200 billion as of March 2023.
CAPITEC going down further due to a Reverse Cup and Handle Since the last analysis, Capitec is continuing to look Bearish.
It's formed another RARE formation called a Reverse Cup & Handle. This is where the handle is on the left side.
Now that the price has broken below the new Brim level at R1659.23
My second target for the bank is at R944.16.
Side note: All the South African banks are showing major downside to come still, not just Capitec. I'm short three of the banks...
Capitec - Hard FallI gave out a stern warning about Capitec's overvalued price. I did say that this stock will be in a crazy nosedive very soon. Price has been falling from the R2 380 highs. We are now approaching the R1 500 zone which needs to be broken.
I'm loading Capitec shares very aggressively at these zones:
1. R550
2. R200
LOOK BEFORE YOU LEAP!!! INVEST WISELY!
CapitecJSE:CPI released results, good/bad/whatever, this week. The stock rallied a bit a day before the results, but the market hasn't been kind to JSE:CPI and other banks. Currently the stock is trading near R1560/share. R1530-ish once acted as an area of value, resistance turned support. Will the "support" level hold?
CPI - Potential LongUsing our fractals strategy, JSE:CPI has signaled a possible long position coming up. The price broke out through the descending resistance line and, if it breaks the high of yesterday, we will be entered into a long position. The stochastic isn't at the most desirable location but it could still play out nicely.
Capitec - trend-line bounceJSE:CPI has tested a trend line multiple times since last October. It is currently bouncing off of this line again and we could see an upward move if it doesn't break through downwards. The stochastic and the MACD are both confirming this momentum. The EMA's briefly crossed yesterday, but have since uncrossed again. If it breaks above yesterday's levels, I will enter a long position.
Cup & Handle on CapitecJSE:CPI has formed a great cup and handle pattern on the day chart. It goes all the way back to December 2019 with the top of the cup being formed on the all-time high that was reached in December 2020. If we successfully break this high, I think we could see a really nice upward move from there.