Breakout bodes well for Next

HIGH street fashion retailer

Signalling more sharp rises to come, this kind of move typically comes after good news. So what are the charts telling us? Closer analysis reveals a bullish outlook.

Next has put in a strong performance for both second and third quarters of the year, as a major bull trend has carryied shares up by nearly 15% from mid-May lows of 1316p.

Then came a halt to the rise, and for the last two weeks shares have traded within a sideways pattern. In fact Next has underperformed the FTSE 100 Index on a relative basis since early August.

This recent lacklustre performance is unsurprising ahead of first half results tomorrow, with many traders unsure of what to expect.

What is surprising is the crucial technical breakthrough. This morning Next shares broke out of their August-to-September continuation triangle, forecasting a sharp rise in the next couple of days.

So how far will shares rise if results are positive? The stock price should continue to rally and reach its all-time high at 1540p within a matter of days.

On a cautious note, just in case technical analysts are getting a little carried away, a drop below 1476p would signal more losses to follow.