Stock: Xero Limited (XRO ASX)
Hitting the boards at $4.50 upon listing in November 2012, the early running for Xero Ltd was all vertical, rocketing up to touch $42.50 resistance by March 2014. Time soon showed that this run-up was simply a case of too high too fast and by August 2015 the stock had given back nearly all that it had gained on its way to finding and forming a low at $11.90. Across the period in which we saw this meteoric price rise & fall, we can also see the significance of the $26.00 level with it twice acting as support and once as resistance along the way. Coming off the long-term multi-year low of $11.90, a two year period of sideways consolidation and slow grind higher followed which saw price work its way back to again test the $26.00 level. After breaking through and coming back to retest $26.00, price then moved north to $32.50 and $35.50 and at both of these levels, the same test, breakthrough and retest pattern occurred. This pattern is a Stock Baron textbook buy entry as featured in our how to catch runaway trending stocks Trading Lesson. From $35.50 support, the stock continued its charge higher, taking out the previous all-time high of $42.50 with ease on the way up to form and test a new all-time high of $47.81 in the process. Having now rotated off the new all-time high of $47.81, price sits precariously poised back atop the $42.50 level.
What Does Xero Do?
Xero Ltd provides “Beautiful Business & Accounting Software”. The company was founded in New Zealand in 2006 by Rod Drury. Having previously enjoyed dual listings on both the NZX and ASX, the company recently made the commercial decision to de-list from the NZX and become solely ASX listed.
To access a list of company announcements and financial summary – Click Here.
The Baron’s Brief – Official Summary
You’d be forgiven for mistaking the Xero Ltd chart for that of a Rollercoaster ride! The initial and premature run-up in price and subsequent capitulation that occurred from 2012 to 2015 is the type of pattern that can leave the novice trader battered, bruised and broke!
Unlike the initial dramatic price rise and fall, the recent recovery off the $11.90 low has been a gradual and sustained move that has seen the previous all-time high at $42.50 taken out with relative ease. The move as a whole is now overextended and a rotation back toward the $38.00 level within the broader buy zone of $35.50 to $42.50 is considered by The Baron as an ideal area to get on board Xero Ltd for the next leg higher.
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Disclaimer: The information contained in this article has been prepared solely for the entertainment & educational purposes of the reader and does NOT constitute financial or investment advice. Any examples presented in this article are for illustration purposes only. No person, persons or organisation are authorised or permitted by the authors to take any action on the reliance of this information without first consulting an authorised, accredited financial planner or advisor. The authors are entitled, at their sole discretion, to hold positions in the above-mentioned stock/s. The authors accept no responsibility for the accuracy, completeness or timeliness of the information contained in this article. Disclosure – No positions are currently held in XRO – ASX at the time of publishing this article (This is a disclosure and NOT A RECOMMENDATION).