Italtile is one of South Africa’s most well-known tile and sanitaryware retailers and manufacturers. It’s had a rough year so far on the JSE, but momentum may be building for a change.
The line chart shows an inverse head-and-shoulder pattern which could be positive. Inverse head and shoulders are usually formations that occur after a down trend where constant selling keeps a share price under pressure.
Above line A (R10.81) the formation may break to the upside and may chase the full target (of the formation) of R12.00.
The 50-day moving average of R10.48 has turned into a support, which is a positive development and may signal that medium-term investors are starting to get involved.
While the 50-day moving average remains as a support level, we may assume that the trend may change to the upside.
However, below R10.53 the share could well head lower, with a worst-case target of R8.89.
For investors: buy or consider a long position above line A, but use R10.29 as a stop loss to protect capital. The long-term target to the upside is R14.22.
For medium-term investors keep in mind that the 50-day moving average is a great barometer to measure investment sentiment. Above the average, investors are generally happy to invest, but below the average, investors may become nervous towards the share.
This trading suggestion reflects the personal opinion of the writer and must not be taken as financial advice.
Frans de Klerk is an independent technical analyst.
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