Capita share price was heavily penalized and is now in an oversold situation near to a solid support area.

Regarding fundamentals Capita seems to be in a good shape. Indeed, sales are estimated in perpetual growth for the next two years. Due to good margins, the company is expected to get a good net income for 2014 (+76% compared to 2013).

After several weeks of horizontal fluctuations within the mid-term range GBp 1070 / GBp 1235, the stock has came back close to the lower limit of the range. Moving averages are flat (in weekly data) and technical indicators illustrate the oversold situation. The GBp 1070 area could cause a positive reaction for the coming trading sessions and allow a technical rebound towards the GBp 1140 mid-term resistance and then the long-term target price is GBp 1235.

Thanks to the technical pattern and Capita strong fundamentals, active investors can take a long position above GBp 1070. The downside potential is limited and the timing seems perfect to benefit from a technical rebound. The goals will be fixed at GBp 1235. However, a bearish trend would regain the upper hand if the security crosses GBp 1070.