Still within its bull chan­nel

Finweek English Edition - - In Brief In The News -

Early in No­vem­ber, Dis­cov­ery an­nounced that it has raised R1.85bn in an ac­cel­er­ated book­build by is­su­ing 10.9m new shares to qual­i­fy­ing in­vestors, as part of its plans to launch its own bank. Dis­cov­ery, which of­fers health, life and car in­sur­ance, was granted a South African bank­ing li­cence last year. This was, how­ever, on the con­di­tion that FirstRand In­vest­ment Hold­ings sell its

25% stake in Dis­cov­ery Bank, and its 25.01% in their Dis­cov­ery credit card joint ven­ture busi­ness.

The funds raised by Dis­cov­ery will there­fore be used to buy out FirstRand.

How to trade it:

Dis­cov­ery is trad­ing in a long-term bull chan­nel. It lost mo­men­tum af­ter test­ing the up­per slope and held at 13 800c/share. It then re­cov­ered and en­coun­tered re­sis­tance at 18 115c/share be­fore fall­ing back and hold­ing slightly above 13 800c/share. Re­sis­tance breached at 18 115c/share could ex­tend cur­rent up­side to ei­ther the up­per slope of the long-term chan­nel, or the 21 000c/share level. How­ever, fur­ther re­sis­tance en­coun­tered at 18 115c/share could see Dis­cov­ery fall back to­wards 13 800c/share. Nev­er­the­less, stay long above 13 800c/share and in­crease po­si­tions above 18 115c/share – as Dis­cov­ery would re­main within its bull chan­nel. A nega­tive break­out of the chan­nel would only be con­firmed be­low 12 360c/ share – thereby trig­ger­ing a sell sig­nal – with po­ten­tial down­side to 10 780c/share. ■ ed­i­to­[email protected]­

Dis­cov­ery head of­fice in Sand­ton

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