Keep a close eye
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. ■