Chart of the Day: Majestic Wine

One of the most obvious effects of the Brexit vote was the way many UK facing companies found their share prices slammed upon fears of a recession – or at least the uncertainty as to how the economy would cope to life outside the European Union. One month later and it is starting to look as though the Brexit dip was a buying opportunity.

Majestic Wine (WINE): Above 50 Day Line Targets 500p

Going into the June dive for the shares there was an extended topping out,  suggesting both significant resistance, as well as hesitation on the part of traders and investors. But just as noticeable since then has been the way the dip at the end of month was effectively the low of the move, with no follow- through on the part of the bears. Indeed, we have seen a consolidation either side of the 200 day moving average at 390p, ahead of the latest spike through the 50 day moving average at 410p. While cautious longs may wish to wait on an end of day close back above the top of the June gap and the 420p level, it does look as though enough has been done to trigger a new leg to the upside. Above the 50 day line therefore suggests a journey towards the top of a rising trend channel from December at 500p could be achieved as soon as the next 1-2 months. This is especially the case with the clearance of the RSI indicator above the neutral 50 level to leave it at 61 today.