TECHNICAL ANALYSIS: DRDGold shares show pullback in an uptrend

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)

chart new sharpen

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

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

ZAR/USD
17.34
(-0.10)
ZAR/GBP
22.82
(-0.41)
ZAR/EUR
20.60
(-0.20)
ZAR/AUD
12.48
(-0.10)
ZAR/JPY
0.16
(-0.21)
Gold
2049.80
(+0.73)
Silver
27.67
(+3.12)
Platinum
978.00
(+1.63)
Brent Crude
45.33
(+1.67)
Palladium
2185.00
(+1.00)
All Share
57629.36
(+2.45)
Top 40
53279.30
(+2.56)
Financial 15
9928.97
(+0.51)
Industrial 25
76162.43
(+1.63)
Resource 10
59790.27
(+4.30)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 885 votes
It depends on how the funds are used.
74% - 5839 votes
No. We should have gotten the loan elsewhere.
15% - 1173 votes
Vote