Naspers Limited (JSE: NPN) has weathered its fair share of ups and downs since late last year, but it’s kicking off the new year on a strong note with a 9.58% year-to-date gain. Towards the end of 2023, the company faced a significant setback when China announced stringent measures to curb online gaming, including restrictions on in-game purchases and excessive gaming.
This hit hard, causing Tencent, a key player for Naspers, to plummet by over 12%. Consequently, Naspers itself saw a steep 18% decline in its share price in a single day, dampening its overall 2023 price return of 10.75%. Yet, the company has shown resilience, swiftly bouncing back as the price recouped all losses within a month of China’s announcement. With the next earnings report not due until June 24th, market sentiment around the broader tech landscape, particularly developments in China, are poised to shape Naspers’ price trajectory in the interim.
Technical
On the daily chart, an uptrend has formed from the late January bottom. However, the 25-SMA (green line) is approaching convergence with the 50-SMA (blue line) and 100-SMA (orange line), signalling a sense of neutrality, confirmed by the decline in volumes. With the RSI also approaching overbought conditions, there could be room for a pullback.
Support at R3,388.40 could be crucial in the upcoming session. If a breakdown occurs at this level, the pullback could be initiated. The hurdles to the selling momentum could be support at R3,307.08 and R3,247.58. These could be pivot points to retest the trend, but if the selling pressure persists, the price could move toward R3,145.44 and R3,069.84, which represent the Fibonacci midpoint and golden ratio, respectively.
Conversely, if support at R3,388.40 holds, the bullish momentum could persist toward the psychological supply zone near R3,511.37. This level has proven challenging to cross recently and could once again be the trigger point for a pullback. However, if the price action pushes above this level, it could result in convergence with higher resistance at R3,588.72.
Summary
Naspers started 2024 on the front foot, reversing the selloff toward the end of last year. However, the uptrend is at risk, as volumes are declining, with the RSI approaching overbought conditions. As we advance, support at R3,388.40 could be crucial in the upcoming session to gauge whether the bullish momentum could be sustained.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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