JSE Merafe's dividend pump and dump cycle about to play out.
Merafe Resources has been ranging between R1.03 and R1.47 since it found resistance around R1.47 on 5th of August 2022.
Overall long term outlook on the stock is bearish, considering that after price found support at R0.23 in March 2020, it had a beautiful rally until April 2022 when it reached highs of R1.96, slightly falling short of breaking the highs of R2.01 from Feb 2017. price fell sharply before being caught in the range mentioned above, which seems to be developing into a large bearish flag following the sharp drop from R1.96.
What is worrying is that, since April 2022 the share price tends to rip and gap lower after every dividend pay out. Considering the upcoming dividend on 11th September 2023 with the Ex-date being 06th September 2023, holders of this instrument may need to take caution.
Looking at recent structure, price has been in a rising channel since June 2023, with a gap between R1.24 and R1.28 that still needs to be closed. So far price has reached the resistance of the channel, double topped and is also far too above the 50 day EMA, closing today's trading session with a Gravestone Doji candle.
All these are ingredients for the Bears' power juice to push price lower from the current levels. The Bears may be woken up once the share starts trading below R1.34. Price may fall back to R1.03 and much much lower over the medium term.
Bearish sentiment will be completely off the table if the price trades and holds well above R1.50.
Overall long term outlook on the stock is bearish, considering that after price found support at R0.23 in March 2020, it had a beautiful rally until April 2022 when it reached highs of R1.96, slightly falling short of breaking the highs of R2.01 from Feb 2017. price fell sharply before being caught in the range mentioned above, which seems to be developing into a large bearish flag following the sharp drop from R1.96.
What is worrying is that, since April 2022 the share price tends to rip and gap lower after every dividend pay out. Considering the upcoming dividend on 11th September 2023 with the Ex-date being 06th September 2023, holders of this instrument may need to take caution.
Looking at recent structure, price has been in a rising channel since June 2023, with a gap between R1.24 and R1.28 that still needs to be closed. So far price has reached the resistance of the channel, double topped and is also far too above the 50 day EMA, closing today's trading session with a Gravestone Doji candle.
All these are ingredients for the Bears' power juice to push price lower from the current levels. The Bears may be woken up once the share starts trading below R1.34. Price may fall back to R1.03 and much much lower over the medium term.
Bearish sentiment will be completely off the table if the price trades and holds well above R1.50.