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Over a period of 8 months (since 18 July 2024), MTN Group has offered traders opportunities to get long (i.e. buy). This is was driven in part by the price action model readings as well as manual review of the technical structure (falling wedge pattern). Although there may be room for further upside, at current levels, the price action model reading (shown below) points to a less appealing reward-to-risk, with overbought conditions being present.
Q: What is the overall trend? A: The overall trend is bullish but with overbought conditions.
Q: What is the current 7-day trend? A: Overbought
Q: What is the current 14-day trend? A: Very Bullish
Q: Is there any opportunity for a short-term buy/long position? A: No, the risk-reward is unattractive.
Q: Is there any opportunity for a short-term sell/short position? A: Potentially, if there is an overshoot or failure to hold prior session range highs.
Q: What is the current position & trend for the short term (1 to 10 days)? A: Would not enter long due to unattractive risk-reward, expecting consolidation or minor retracement.
Q: What is the current position & trend for the medium term (2 to 4 weeks)? A: Aggressive buying but overbought, expecting consolidation or minor retracement.
Q: What is the current position & trend for the long term (5 to 8 weeks)? A: Aggressive buying, but do not chase. Look for overshoot or failure to hold prior session range highs to short, aiming to sell back to the 8-EMA.
Summary: For the short term (1 to 10 days), the strategy would be to avoid long positions due to the unattractive risk-reward, with the expectation of consolidation or a minor retracement. In the medium term (2 to 4 weeks), despite aggressive buying, the market is overbought, suggesting a strategy of watching for consolidation or a minor retracement. For the long term (5 to 8 weeks), while the trend remains aggressively bullish, the strategy is to avoid chasing the price and instead look for potential overshoot or failure to hold prior session range highs to initiate short positions, aiming to sell back to the 8-EMA.
The price action model reading as highlight at 7400c on 18 July 2024. The original post can be accessed at the following link: https://www.unum.capital/post/mtn-group-here-s-what-the-data-says-thursday-18-july-2024
MTN Falling Wedge Structure (27 November). The original post can be accessed at the following link: https://www.unum.capital/post/mtn-group-levels-of-interest-falling-wedge-structure
Lester Davids
Analyst: Unum Capital
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