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Sareum Shares Edge Higher Forming a Pre-Breakout Structure, Is a Rally Imminent?

Simon Mugo trader
Updated 9 Feb 2021

Practice Stock Trading
Sareum logo

Shares of Sareum Holdings Plc (LON: SAR) edged higher today forming a pre breakout structure that could lead to a breakout and a rally, but the stock’s previous price action does not inspire confidence.

Given that Sareum has not made any major announcements today or in the last few days with its last major announcement being made a month ago on January 8th, the stock’s price action over the past month has been driven by investor sentiment.

Sareum’s stock price fell after the January 8th announcement then proceeded to inch higher over the next few days before falling and erasing all gains made during the rally. The stock has been trading sideways for the past 8 days and has formed a nice pre breakout structure.

Pre breakout structures typically lead to a rally that could last for a few hours, days, or weeks depending on the timeframe on which the structure formed and in Sareum’s case the structure formed on the daily chart.

There’s only one caveat in Sareum’s case, which is that the company’s share price has in the past broken above key resistance and support levels only to reverse course and head in the opposite direction.

The chart below does not have clear support and resistance levels due to the stock’s past behaviour, which is why there are no guarantees that we will get a sustained rally this time.

However, the odds favour a breakout and a rally over the next few weeks barring any negative developments.

Traders interested in opening new positions in Sareum have a good opportunity to do so at current prices for the highest risk to reward setup.*

*This is not investment advice.

Sareum share price.

Tradingview chart of Sareum share price 09-02-2021

Sareum shares edged 1.79% higher to trade at 1.985p having risen from Monday’s closing price of 1.950p.

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading