De La Rue: close above this price and the shares could rocket

After new contracts supercharged the company's share price, our chartist re-runs the numbers.

De La Rue (LSE:DLAR)

You don't need dandruff to have a Blue Passport, despite De La Rue (LSE:DLAR) experiencing a solid 'Head & Shoulders' moment between 2003 and 2018!

Before moving on to discuss chart patterns, smiling about De La Rue losing its post-Brexit UK passport contract to a French concern still feels cruel.

However, De La Rue appear to be benefiting from new international contracts and their share price has bounced from its Covid-19 bottom, so perhaps this banknote and security document printer shall provide some decent recovery in the months ahead.

Thus far, the market appears to think so as the recoil from the 40p level has been pretty stunning.

We're pretty far from "sold" on the concept of chart patterns, but the vague 15-year Head & Shoulders formation on DLAR suggested the potential of the price reversing to 22p.

Even our own calculations had presented an ultimate bottom potential at 15p, when we briefly glanced at the share price back in May 2019.

When the share opted to spend a couple of months at the 40p level, we awaited the final plunge as it felt inevitable.

Thankfully this didn't occur and, instead, the price appears to have easily exceeded the immediate downtrend.

• Stockwatch: De La Rue up 350%, what now?

While we distrust chart patterns, the circled area on the chart highlights something we've grown to like as it's fairly reliable.

A 'Glass Ceiling' has formed at 150p, and only with closure above this level dare we speculate on the potential of coming growth to 257p.

If exceeded, our secondary calculation works out at 415p. In the great scheme of things, both targets make a lot of visual sense.

An attempt at 257p in the months ahead shall signal a challenge of the blue downtrend can be expected.

If 257p is exceeded, a further attempt at 415p matches the level of trend break back in 2019, when the share price finally slipped below the long-term red uptrend.

From a big picture perspective, closure above 415p is liable to be a serious signal, one capable of provoking strong recovery.

We shall require to run the numbers again above this level thanks to the number of manipulation gaps on the chart but an initial attempt at the 600p level looks sane.

Goodness knows what will happen if the company ever discover blue ink for their printers, enabling the fabled UK Blue passport to be again produced in England.

All kidding aside, we're puzzled at how this nonsense became a media "thing", assuming most folk keep their passport in a wallet which also contains sufficient pockets for all the other bits of paper required to fly anywhere, along with tickets for parking, seating, and the business card of that bloke you sat alongside seven years ago...

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.