Can Bovis build foundations for a rally?

A POORLY kept city secret,

The question is, can shares reach their spring highs of over 600p with a background of higher interest rates and a falling housing market? In terms of technical analysis, the answer is yes.

The charts reveals a picture of long-term strength. Shares have built on solid foundations, climbing from last year's lows of below 350p to March highs this year of 605p. And despite a period of consolidation around 500p, Bovis now looks set to continue its long-term trend.

The recent rally ahead of today's announcement carried the stock from 530p in late August to its current apex of 570p. And this rise has formed a positive technical pattern known as a 'flag'. So what does this tell chart traders? Any move higher from current levels will confirm the pattern and Bovis shares should then burst through old highs with an upside target of 614p.

But with all the good news in the market, will the stock have enough momentum to confirm the pattern with a close above 576p?

If it fails, the price could temporarily drop to the 552p support area. Only a breach of this important support would indicate further losses.

Stockwatch is written by William Akerman of Quantigma. For more views on techical analysis, go to www.quantigma.com.