Dis-Chem Pharmacies (DCP ZA)

Dis-Chem is one of the leading pharmaceutical and consumer wellness groups in South Africa.

- Analysts: Peet Serfontein, Pritu Makan

The company takes a 'Pharmacy First' approach with the main aim of serving the primary pharmaceutical needs of individuals. The group also utilises its wholesale business to service third parties and Dis-Chem retail pharmacies through its CJ distribution business.

Technically, the price is in a developing symmetrical triangle pattern, which makes the share an interesting candidate for a long position (see black converging trendlines on the main chart). Furthermore, the price distribution chart for DCP supports a bullish case given that the current price of R32.60 is situated within one of the most heavily-traded and high-frequency zones over the last five years (see insert on main chart).

The price is trading above its 200-week simple moving average (SMA), but below its 200-day SMA–the level of the 200-day is at R33.54. This is generally seen as a form of long-term bullish support. Upside momentum, as indicated by the Moving Average Convergence Divergence (MACD) histogram, supports the trade idea.

Technical analysis