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Purple group

April 21, 2024
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1. Profit taking 2. Buying Oppportunities 3. Price targets

Purple group saw a massive jump in the year 2021 and it returned handsome gains of +300% to investors. The stock moved from pennies to an ATH of R3.50/share in a short space of 12 months.  However, the stock was aggressively moving in a straight line (Parabolic move) as shown in the pictures above. It is no secret that no stock moves up in a straight-line for a prolonged period. 

The parabolic high of R3.50/share is a first good indicator to use in estimating where the first buying opportunity for investors and traders will be. After every parabolic move, market should fall-off from ATH by at least 50% and this points us to R1.75/share on purple group. This is the first buying opportunity. 

 

Most investors had set their buy zone at R2.00/share as the level was seen as a major support. However, the stock seem to be trading comfortably around and below R2/share and this is a sign of price weakness. The R2 zone was previously sensitive and market rejected several times on it, but that is no longer the case. The weakness will possibly and sustainably drive price to R1.75 and R1.50 - R1.40. The move will bully emotional investors into taking profits. Conservative Investors and traders started taking profits late last year.

 

The stock is trading below a  200 moving average(weekly) and has presented a three crow candles on a monthly chart. These are more downside signs that will possibly drive the stock to lower levels. 

 

Can the stock reach R10/share??

Well Whether you are a long or short-term  investor on the stock, calling R10 on the stock is rather speculative. A much realistic high for me on the stock, would be R5/share and this not a high that can be reached anytime soon. It is definitely not going to happen this year and it might not even happen the following year.

 

 

Disclaimer: This is not financial advise but rather an opinion from a technical analysis point of view.

 

 

 


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