Drax: can its shares power up to this level?
The company’s shares are back on track from taking a hit in March. Our chartist examines the key numbers
6th August 2020 09:45
by Alistair Strang from Trends and Targets
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The company’s shares are back on track from taking a hit in March. Our chartist examines the key numbers.
Drax Plc (LSE:DRX)
At this time of year, considerable effort is made to lay in a decent supply of firewood for the coming winter in Scotland.
As anyone with oil-fired heating knows, it’s not the cheapest way to heat a home.
Being blessed with a forest in the back garden, it seemed like it would be easy to attach chain and rope to fallen trees and use our little red tractor to pull the trunks over the cliff and down to the garden.
Matters went well until the first tree dropped off the cliff. On hitting the ground, it defied gravity and leapt sideways into the base of the waterfall.
This resulted in a few issues, namely the tree trunk was clearly heavier than the tractor, which briefly became airborne before getting partially lodged in the stream gully.
Second, the waterfall flow rate is presently a health hazard, thanks to what TV weather reports described as “biblical levels of rain”.
An innocent attempt to have a supply of timber, ready for friends to chainsaw and chop this weekend, created a tale that shall be greeted with slowly shaking heads.
This was a job that should not have been tackled solo!
Of course, while sitting looking out at the abandoned tractor, my thoughts turned to how Drax will cope next year.
They plan to close their coal-fired facility, instead focusing on wood-fired green energy as they aim to become a zero-carbon energy supplier. Hopefully, the company engage brain before trying to drag logs down a hill.
The Drax (LSE:DRX) share price, presently around 289p, needs to exceed only 295p to hopefully trigger some growth to an initial 339p.
If bettered, our secondary calculates at a longer term 361p but visually, closure above 339p looks like being game-changing for the share’s future.
Such an event will tend to suggest the glass ceiling around the 339p level has broken and we should make long-term plans for 480p and beyond.
If Drax intend to spoil the party, the share price needs to slip below red on the chart, currently around 240p.
Such a movement threatens reversal to 208p initially with secondary, if broken, working out at 151p and hopefully a bottom.
Our suspicion is that Drax’s share price plans some gains.
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.
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