Have Majestic Wine shares already bottomed?

by Alistair Strang from Trends and Targets |

Having halved in value from last year's peak, the worst may be over for Majestic, argues our chartist.

We've kept an eye on Majestic Wine (LSE:WINE) since its rise from 100p in 2009 to 600p in 2013. The shares behaviour during the last few months has been interesting to say the least. The drop to a bottom of 235p was, from our perspective, mathematically precise.

Unfortunately, it creates the situation where weakness now below 237.5p risks introducing some danger, due to a calculation which gives a bottom at 213p and hopefully a realistic bounce.

Our secondary below 213 calculates at 127p, a calamity which looks like it would require negative new flow or a board decision the company concentrate on English wines only…

We mentioned earlier the drop to 235p was mathematically precise and it actually gives some hope for the future.

If the share price were to move beyond 298p, we'd argue bottom was officially "in" at 235p as an initial recovery target calculates at a tame 306p.

In the event this level is exceeded, our secondary is a useful 348p, along with a need to revisit the price for additional analysis.

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, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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