JSE:REN has had its share price suffer quite the beatdown since April 2022. Price has painted a clear and worrying Head and Shoulders pattern from February 2021 to date. Interesting developments however are keeping the instrument alive and invalidation of this huge H/S pattern could send the share price to levels never thought of before.
Considering the recent price action, the mini right shoulder is in progress within a falling channel, however we have closed this week strongly bullish after last week's close of an inverted hammer on the Weekly chart (morning star candlestick pattern). Price has also painted a somewhat 'double bottomish' structure at the support level. looking at the RSI, we have painted a lower low into oversold territories while price painted a higher low which is a bullish signal. Keeping in mind the bigger H&S pattern, long positions should be approached with extreme caution.
- Small long positions can be initiated when price starts to trade above R20.55, making use of a stop loss at R19.80. The position can be added onto when price trades and holds well above R24.30 while trailing the stop. interesting levels to look out for would be R28.50, R31.40 in the medium term, and if bullish momentum is sustained beyond these levels we can target R38.00~R43.90.
Another nasty side of the coin that may play out is price failing to sustain the bullish momentum beyond R23.50 and then strongly breaking the neckline of the H&S pattern to the downside, which may see price trickle down to R9.60 and lower. It must also be borne in mind that price may completely reverse from the R28.50~R31.40 zone as way to complete an even bigger shoulder and this zone needs to carefully monitored.
Considering the recent price action, the mini right shoulder is in progress within a falling channel, however we have closed this week strongly bullish after last week's close of an inverted hammer on the Weekly chart (morning star candlestick pattern). Price has also painted a somewhat 'double bottomish' structure at the support level. looking at the RSI, we have painted a lower low into oversold territories while price painted a higher low which is a bullish signal. Keeping in mind the bigger H&S pattern, long positions should be approached with extreme caution.
- Small long positions can be initiated when price starts to trade above R20.55, making use of a stop loss at R19.80. The position can be added onto when price trades and holds well above R24.30 while trailing the stop. interesting levels to look out for would be R28.50, R31.40 in the medium term, and if bullish momentum is sustained beyond these levels we can target R38.00~R43.90.
Another nasty side of the coin that may play out is price failing to sustain the bullish momentum beyond R23.50 and then strongly breaking the neckline of the H&S pattern to the downside, which may see price trickle down to R9.60 and lower. It must also be borne in mind that price may completely reverse from the R28.50~R31.40 zone as way to complete an even bigger shoulder and this zone needs to carefully monitored.
