Trade Sasol Ltd with Unum Capital.
To get started, email lester@unum.co.za
As noted: "These levels are subject to change as the price action/news flow develops or as the underlying commodity adjusts."
Previous Post: How To Trade: Sasol Ltd
Among the various technical considerations that the price action model provides, one of the most common is informing traders when NOT to chase a share. In other words, when NOT to buy as the potential for a pullback is great and that the reward-to-risk is unappealing. Reviewing the model in the evening, the automated guide gives us readings which go along the lines of "Aggressive buying, but do not chase..." If you follow my model, then you've seen it many times before.
Such was the case with Sasol on Friday evening where the model for the short term (1 to 10 days) was as follows: "Aggressive buying is underway, but do not chase. Look for the share to overshoot or fail to hold the prior session highs to short/sell back to the 8-day EMA".
The time-stamped model reading is shown below:
What has subsequently occurred? Sasol failed to hold Friday's highs and has experienced a sharp bearish reversal on Monday (20-January) as well as yesterday (21-January).
If you are a short term trader, this seemingly insignificant piece of information has the ability to help you do the two things our research strives to do: (1) manage risk (protect capital) and (2) uncover opportunity (make money).
As of yesterday's close, the model is as follows:
Take note of the short term reading: "The share is consolidating within an upward trend. If the 8-day EMA has been breached, use the 21-day EMA as a potential buy range".
Medium term: no reading available.
Take note of the long term reading: "Strong attempt at a bullish reversal following an aggressive sell-off"
On the chart below, the 21-EMA is white sloping line. This is also in line with the 61.8% Fibonacci retracement zone.
These levels are subject to change as the price action/news flow develops or as the underlying commodity adjusts.
Lester Davids
Analyst: Unum Capital
Comments