FOXTONS - Sell Opportunity

Mar 3, 2018

Occasionally we are asked by certain private clients of ours to analyze specific stocks.
At times therefore, we find it might be useful to share these analyses to show all traders that certain structure patterns can also be applied to stocks and not only to currency pairs, indexes or commodities.
As FOXT is one of the most relevant companies in the british real estate market and certainly the realtor with more franchises in the country.
As the risk for a hard brexit and the consequent block of the free circulation of capitals, goods and people has resulted in a slight decrease of the demand for housing and a consequent moderate reduction of the price of houses generally speaking, one would tend to think that these factors would weigh in heavily on those companies who are publicly listed on the british stock exchange and belong to this industry. In fact, this would be mainly due to the reduction in the number of transactions, which is a key component of the value these publicly traded companies have.
However, upon a closer inspection, one can clearly see that the medium term downtrend (monthly to daily timeframes) that this stock has been in over the last few years has begun long before the referendum on Great Britain's exit from the European Union became a reality. That alone should signify that no matter how heavy one would think certain news events would weigh in a specific market and it’s financial instruments, these can be totally irrelevant in the bigger picture. In other words: markets are far bigger than single news, no matter how big the news.
Getting back on the ground and going back to our analysis, on the daily timeframe we can notice that FOXT has been in a correction for a while. More in detail, the stock has gone through an abc correction that seems to be entirely over. Notice that, as often happens, the 3 wave correction proceeds in further movements and becomes a 5 wave correction. As we are seeing it now, however, the 5th wave did not break the previous top of the third wave, so one would tend to think that it still has to, but that is not necessarily the case and we believe that, although there is still a slim chance that is still might, since structurally speaking it doesn't have to do so to be complete, the stock is going to drop from here. As it stands now therefore,we are looking for sell opportunities only on this title, as the expected target once it breaks below the corrective structure, is to break the monthly low first around the 47 area, and potentially drop all the way to the 31 area.

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