Afterpay Touch Group Limited [ASX:APT] is an Australia-based technology platform company. It provides a ‘buy now, pay later’ payment service.
Since the business merged with Touchcorp in June 2017, it has dominated this industry.
And since January this year, its share price has doubled — from $12 to $25.
What’s the news behind this move?
On 26 February, Afterpay announced its first half 2019 results.
APT’s total income was up 124% from the same time last year. And the company plans to expand further. More than likely, investors like this news and are pricing in growing profit expectations.
So, what next for the share price?
As a technical analyst, here’s how I think about it…
Afterpay hit a high of $23 in August 2018. Then the stock pulled back for several months, all the way to $10.36 in November 2018. It’s rallied from this low point ever since.
One way to make sense of this move is to use ‘range extension’ analysis.
It works like this. Take a look at the following chart:
If you take the range from the low in December 2018 to the high of March 2019…you get $9.74.
If you then add $9.74 to the most recent low at the end of March 2019 ($19.28, as you’ll see on the chart), you can forecast the likely next resistance point at $29.02.
So, here’s what I take away from this theory…
Should Afterpay continue to trade up from here, $29.02 is the point at which I would expect the share to start falling away. I would be wary of buying at that point.
I hope you found this interesting.