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DRDGold has been leading the local gold shares higher in recent weeks and months. The gold sector is currently giving a short-term pullback, and this is setting up another buying opportunity in gold shares, such as DRDGold.
DRDGOLD (DRD): A pullback in an uptrend.
Broad recommendation: Buy on this pullback.
Current trend: Short-term down. Med- and long-term up.
Strategy: Look to buy from the R5.50 level.
Chart setup: DRD triggered its initial buy when it broke out above line 2 a few months back: it has exceeded its first target from channel 1-2 and still has higher to go.
• Its Elliot Wave count (roman numerals), shows it in a Wave-iv correction right now, with another large rally (Wave-v up) to come. (Elliot Wave analysis postulates five waves in the direction of the trend).
• Its weekly Stochastic (on top) is relatively overbought, and can still pull back more before the price is ready to go again.
(Daily chart)
Strategy details: Look to buy it again on a pullback to/near the R5.50 level. (I like it see a reversal day/candle up in that area to enter).
Target: After the pullback, a rally to the R10 level to start taking trading profits. Note, long-term resistance is line 4 at R12.62.
Stop-loss: A weekly (i.e. Friday) close below R5.00.
- Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend trading courses, please go to www.themarket.co.za
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