Un­der pres­sure

Finweek English Edition - - Marketplace - Mox­ima Gama

tech­nol­ogy group EOH said ear­lier in Septem­ber that it ex­pects head­line earn­ings per share to in­crease by be­tween 10% and 20%, dis­ap­point­ing in­vestors who have be­come ac­cus­tomed to higher growth rates from the group.

EOH’s share price has been de­clin­ing since Oc­to­ber 2016 af­ter en­coun­ter­ing ma­jor re­sis­tance at 18 000c/share. It was placed un­der fur­ther pres­sure af­ter the abrupt de­par­ture of CEO Asher Bo­hbot in June af­ter al­most 20 years, and fol­low­ing the pub­li­ca­tion of cor­rup­tion al­le­ga­tions in July in­volv­ing a con­tract with the South African So­cial Se­cu­rity Agency (Sassa). EOH de­nied any wrong­do­ing in its Sassa deal­ings. On the chart:

EOH is test­ing the sup­port trend­line of its long-term bull trend, and the three-week rel­a­tive strength in­dex (RSI) has been fall­ing since Septem­ber 2016. If EOH holds firmly on that trend­line and re­cov­ers, cur­rent lev­els will look at­trac­tive.

How to trade it:

Go long: If EOH holds above its ma­jor sup­port trend­line, and the three-week RSI forms ris­ing bot­toms, EOH will most likely es­cape its bear trend. A move above 11 750c/share would be bullish. A good buy­ing op­por­tu­nity would be pre­sented above 12 400c/share – pro­vided that the RSI trades out of its one-year bear trend. A re­cov­ery to­wards 14 865c/share could then en­sue. In­crease longs above 15 700c/ share, as gains to 18 000c/share would be pos­si­ble.

Go short: Breach­ing the sup­port trend­line of the pri­mary bull trend would be a very bear­ish sign. A neg­a­tive break­out would be con­firmed be­low 9 000c/share


has been rated as one of the top five tech­ni­cal an­a­lysts in South Africa. She has been a tech­ni­cal an­a­lyst for 10 years, work­ing for BJM, Noah Fi­nan­cial In­no­va­tion and for Stan­dard Bank as part of the re­search team in the Trea­sury divi­sion of CIB.

SOURCE: Me­taS­tock Pro (Reuters)

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