Interactive Investor

Are 3i Group shares about to take off again?

After an impressive rally, shares in this private equity investor have paused for breath. Independent analyst Alistair Strang reveals what his charts say about the next move.

9th April 2024 07:49

by Alistair Strang from Trends and Targets

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Everyone knows all the dangers associated with bottom feeding, trying to discriminate the exact level at which a share shall stop going down and start bouncing. There’s a converse scenario, one just as fraught with trouble, easily spotted when a share price keeps going up.

3i Group Ord (LSE:III) currently provide quite a useful case in point, with their share price soaring higher than ever. We’ve shown a little chart extract, one which is doubtless pretending to advise nervous investors 3i share price has reached a plateau, one where some trouble should be anticipated.

The analytical investors shall convince themselves the £30 level is about to provide a hurdle beyond which the price clearly cannot go, the immediate period of flatlining doubtless indicating a halt to any buying frenzy.

We’re not entirely convinced this shall prove to be the case. On the chart, we’ve circled an area from 2023, a point where the share price previously discovered a case of nerves just above the 20 quid level. It’s certain a fair number of traders successfully convinced themselves the price had reached a natural barrier, opting to pocket their profit, then watching aghast as the share price continued to climb by almost 50%.

We don’t trust these plateaus as shown on the chart below, especially when they occur as a share price is climbing. We’ve even coined a pet name for them, a flat trend. When a share price successfully closes above such a flat trend, it’s almost always a signal the climbing season is again upon us.

In the case of 3i Group, share price closure above 2,823p shall give some hope or, more probably from an intraday perspective, movement exceeding 2,858p giving a solid suggestion movement to an initial 3,003p has become our next ambition with secondary, if bettered, at 3,336p.

We’ve a whole bunch of reasons to anticipate some price hesitation at this secondary level but would warn investors to take care. If the market starts to “gap” 3i's share price up at the open any time now, we shall take this as a signal they also intend to climb past 3,336p sometime in the future.

If things intend to go wrong, the price needs below 2,229p (red line on the chart) to indicate slight panic, giving the potential of weakness possible to a future 1,575p, if everything intends go really wrong. Visually, we doubt it.


Source: Trends and Targets. Past performance is not a guide to future performance.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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