Admittedly, I was premature in doing so as Telford’s shares continued to make hefty gains on the back of the London housing market boom, peaking at a record high of 495p in May last year. In the circumstances, it’s hardly surprising that some investors have taken the opportunity to bank some profits since then. However, having seen Telford’s share price de-rate sharply from those highs, the risk:reward ratio looks very favourable to me both from a technical and fundamental perspective.
Interestingly, the post-EU referendum trough in the share price coincides exactly with the low point two years ago when shares in UK housebuilders were being battered during that summer’s market turmoil. Also, there is positive divergence on the chart with the 14-day relative strength indicator (RSI) failing to confirm the lower price lows hit post the EU Referendum, a good indicator that a bottom could be in place. In addition, Telford's share price seems to be exerting pressure on its summer highs of 300p, creating a sequence of higher lows each time that this price point is being tested. From my lens a least, a break-out above the 300p price level appears a distinct possibility and one that would pave the way for a relatively quick return to the May highs around 370p.