Xero is about to rally even higher
Xero (XRO) is a chart that we have followed a few times this year and the stock continues to climb. Price action is once again indicating that there from current levels, we should expect even more upside for Xero.
It first came to our attention in April when it finally broke through resistance in the mid $19’s. This breakout was on high volume. This means that the stock was likely to go on a run. And go for a run it did, rallying very quickly towards $26 by early June. This bullishness was backed up by the very high volume being traded in the stock. You can see this clearly on the weekly chart (circled). After that fantastic move higher, the stock then underwent a fairly flat correction. This is a bullish sign for two reasons. Firstly, it enabled the stock to sit under the 2015 and give it time to wash out any profit takers. The second point to note is the volume. You will notice that during this sideways movement, volume was fairly low. This indicates that whoever was trying to sell stock, was in a minority.
Now we are seeing that profit taking come to an end. Because of this, the stock has jumped up in the last few weeks. As a result of this, serious volume is now coming back into Xero. The stock is testing the upper levels of the recent trading range is now sitting on top of the 2015 high. In my opinion, this indicates that Xero is now starting its next move higher. I have a trading target of about $30 for Xero. And I believe that this will happen in the next several weeks.
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Michael Gable is managing director of Fairmont Equities. We are a small boutique advisory that uniquely combines both fundamental and technical analysis. As a result, our analysis is featured regularly in the finance media such as the Australian...
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