Technical analysis: Naspers building for big move

NASPERS-N shares have moved sideways in recent weeks and are building up for a sharp move in either direction; but right now they still have a downside target in place. Naspers N: A breakout coming Recommendation: Enter in new breakout direction Trend: Short-term sideways to down. Medium-term down.

Naspers is building up for a big move (short term). It’s currently moving sideways in a small channel (lines 2 and 3) and will break out soon (in either direction). It is forming a “potential” inverse head and shoulders (H/Sh) in the shortterm (labelled s-h-s?).

But medium term it has a larger head and shoulders (S-HS in red), which has a lower target. Usually the bigger pattern takes preference.

Enter in the new breakout direction that is, buy a close above line 3 ( R1 735), or, sell short a close below line 2 (R1 628). Do whichever happens first.

For an upside breakout the target is to R1 838, that is the height of channel 2-3 projected up. With potential to R 1945 (based on the inverse H/Sh). For a breakdown, the minimum target is R1 540 for partial profits, with further potential to R1 457. The large downside target is R1 350 (based on the large H/Sh). I’m a little bit sceptical of it reaching that target though.

For a buy signal the stop is a break of its previous two-day low from the start. For a short signal, it’s a close of more than R1 735. Then use a breaking of its previous two-day high from R1 542. Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za