Vodafone ready for a rise?

LAST week saw Vodafone's share price falling after its Japanese unit posted a fall in subscribers.

The decrease in customers has prompted commentators to speculate that the mobile operator's troubles may be further deepening. Indeed, the market's love affair with Vodafone has been on the rocks for months.

Lack of transparency and strategic foresight from Arun Sarin has cost the share price dearly.

But just as the CEO‘s troubles seem at their worst, technical analysis reveals a chink of light. A bounce is in sight.

A quick glance at the charts reveals a sorry state of affairs. Tumbling from May highs of 144p, shares have given back some 20% in just over three months.

Currently trading at a paltry 117p, this coincides almost precisely with a key 61.8% Fibonacci retracement level. This is an important technical target, and fulfils the most critical retracement criteria.

So what next? Having pulled-back from previous highs, Vodafone should stabilise and then move upwards. Initial and modest targets are between 121p and 122p. And if the stock holds those levels the next jump should be back towards 128p.

So in summary, on a relative basis Vodafone has massively under-performed the FTSE Index since May but has now stabilised. Commentators and analysts are all on the 'selling' bandwagon and the contrarian in me says that could be a signal to buy! If shares are going to move forwards, then the next few weeks is the time they‘ll do it.

Stockwatch is written by William Akerman of Quantigma. For more views on techical analysis, go to www.quantigma.com

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