Keep a close eye

Finweek English Edition - - Market Place - By Mox­ima Gama

the em­bat­tled tele­coms gi­ant may have re­turned to prof­itabil­ity in the first half of the year, but its ex­pected earn­ings re­main about 65% below the prof­its it earned be­fore the Nige­rian reg­u­la­tor im­posed a record fine on the group in 2015. This fine prompted a ma­jor man­age­ment shake-up at the op­er­a­tor, and led to MTN re­port­ing its first loss in 20 years in 2016. MTN was set to re­lease its in­terim re­sults on 3 Au­gust, af­ter this is­sue went to print.

On the chart:

MTN is cur­rently range-bound be­tween 15 650c/share and 10 475c/share, pos­si­bly in the con­sol­i­da­tion phase of a bot­tom­ing-up pat­tern, which would end above 15 650c/share – kick­start­ing the as­cend­ing phase of the bullish re­ver­sal pat­tern. With new man­age­ment, there is a sense of op­ti­mism that MTN will re­verse the im­pact of a se­ries of ma­te­rial reg­u­la­tory, macroe­co­nomic and po­lit­i­cal chal­lenges ex­pe­ri­enced across its re­gions.

How to trade it:

Go long: In a tighter range, MTN is trad­ing be­tween 10 475c/ share and 13 500c/share. Up­side through 13 500c/share could see MTN ad­vance to its ma­jor re­sis­tance level at 15 650c/share. The three-week rel­a­tive strength in­dex (RSI) is cur­rently com­ing off an over­bought po­si­tion. Sup­port re­tained above 10 955c/ share – thereby form­ing a ris­ing bot­tom – would be a bullish sign. Go long above 13 500c/share, with the tar­get sit­u­ated at 15 650c/share. Stay long on up­side through that level. Next re­sis­tance would be at 18 750c/ share.

Go short: Sell below 10 475c/ share as key sup­port would be breached, po­ten­tially trig­ger­ing an ag­gres­sive sell-off to­wards 7 345c/share. ■

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