Trade FirstRand Ltd with Unum Capital.
To get started, email lester@unum.co.za
Well done to traders who may have managed to capitalize on the moves, both on the short (sell) and long (buy) side.
On Sunday, 12 January, I published the note on FSR, highlighting the model reading which stated that the share had become attractive for a buy/long position (short term: 1 to 10 days). On Monday, the share traded lower, giving traders an opportunity to accumulate. What was even more interesting was the end of day reading on that same day (Monday 13 January), which stated the following for the 5 to 8 week reading: "The share is trading in a weak to sideways consolidation range. It recently experienced a sell-off. Expect a small rebound." The time-stamped reading is highlighted below.
Previous Post: Sunday 12 January (Trading Firstrand? Here's What You Need To Know)
FSR breaching six-month horizontal support. It's possible that the share could experience false breakdown, followed by a rally back into the declining moving averages before turning lower again. Note: The 200-day moving average remains in a gradual upward trend. This is a positive factor in the short to medium term.
What's the overall outlook for FSR based on this model? The outlook is currently mixed. In the short term, we see bearish momentum and the stock is approaching oversold territory. However, the reward-to-risk ratio is becoming attractive for a small long position.
Can you elaborate on the short-term outlook? In the 7-day trend, FSR is showing high bearish momentum. It's also getting close to being oversold, which could indicate a potential reversal.
And what about the medium-term? For the 14-day trend, we see a very bearish outlook. Aggressive selling is expected, and we're waiting for lower time frames to stabilize before making any moves.
What about the long-term? The long-term trend is also bearish. We're seeing aggressive selling following a steady upward trend. We're looking for support at prior swing lows to capture minor rebounds.
So, what's the recommended course of action? Given the mixed signals, we recommend a cautious approach. A small long position could be considered due to the improving reward-to-risk ratio, but we'll need to monitor the situation closely and wait for lower time frames to stabilize before making any significant moves.
Lester Davids
Analyst: Unum Capital
Related Post: https://www.unum.capital/post/firstrand-automation-to-manage-risk-uncover-opportunities
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