Top5 oversold/overbought according to RSI & ShopriteFTSE/JSE All Share Top5 oversold/overbought according to 14day RSI indicator as follow:
Oversold:
Intu Properties 21
Fortress Reit A 29
Ascendis Health 30
Telkom 32
Shoprite 33
Overbought:
Prosus 78
BATS 77
Northam Platinum 72
DRDGold 69
Trencor 67
Spending some time on Shoprite. SHP been struggling to find a breakout from the current Descending Broadening Wedge pattern, which started its trend in October 2018. In short, a descending broadening wedge is considered to be a reversal pattern and is bullish indicator. Though the pattern is typically a signal of reversal, continuation of the downtrend is still possible. Since the end of August (2019), we've seen bounce off the bottom part of the wedge and a nice recovery in the share price since then.
What should also be noted is that since that recovery started, how many times the share price found support at R120 (current level). By doing so, we've seen that SHP created a short-term Descending Triangle pattern, which could see the share price test R131 over the short-term if support (R120) holds. Not only will there be short-term resistance at the top of the Descending Triangle, but also the 50-day moving average, which coincides with these price levels (R131). A break and close above these levels could be very positive for SHP, which could very much see the share price test the top of the Descending Broadening Wedge. A break and close above R140, would be a formal break of the downtrend, which could signal a reversal. Next target/resistance level will then be the 200-day moving average at R145.33, with a break and close above these levels bringing my medium-term target of R160 into play.
The share price finds itself in EXTREME OVERSOLD environment according to its 14-day RSI.
A break and close below R120 (support), could very much see the share price seeking out the previous support levels of R110, which will be my stop-loss if I was a short-term trader. It is for this reason why I would rather wait for confirmation of a bounce off the R120 support line.
On a fundamental basis, we still value the company closer to the medium-term target (above). Read our full report here: oldoak.co.za
