Spar, one of South Africa’s largest grocery and household goods retailers, may be setting up for a price recovery after a recent bout of weakness.
The chart below shows what may be a falling wedge pattern on Spar’s daily share price – a technical formation that, when confirmed, can signal a potential upward breakout. This suggests that Spar’s share price could be due for a rebound if it manages to break above a key resistance level.
If the price rises above R107.45 (line A), the wedge pattern might push the share price up to R118.33 over time.
Short-term traders looking to capitalise on the potential upside can consider buying above R107.45 – but should set a stop loss at R102.43 to protect against potential losses. The possible targets to the top are: R108.56, R109.63, R110.38, R111.66, R112.36, R113.32, R114.89, R115.70, R116.42, R117.65, R118.33, R119.67 and R120.
Longer-term investors can follow the same strategy, but with added caution. Spar’s 50-day moving average currently sits at R109.65 – a key level to watch. If the share price stays below this average, investor sentiment is likely cautious. A move above the average could confirm a more positive trend.
The 50-day average acts as a sentiment gauge. Above it, investors are optimistic; below it, they’re wary.
The outlook isn’t guaranteed. If the share price drops below R104.23, Spar could face further declines, and levels to watch there are: R103.62, R102. 43, R101.34, R100, R99.89, R98.65, R97.21, R96.56, R95.83, R94.30 and even R93.72.
Frans de Klerk is an independent technical analyst. This is the personal opinion of the writer and must not be taken as financial advice.
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