Sasol: Technical Position & Outlook

Thursday 24 October 2024

Time Published: Pre-Market

Ticker: SOL

Despite the recent low price and short term oversold conditions, the weekly chart painted the picture of a share that had further room to fall. This view was shared with clients a month ago on Monday 23 September in the note: "Avoid: Large Cap Weekly Breakdown'. As of yesterday's close, the model reading highlights the following: SHORT TERM (1 to 10 days): "The reward-to-risk is becoming attractive for a small buy/long position' while the MEDIUM TERM (2 to 4 week) reading states that "traders would be best suited to wait for the price to stabilize" i.e. stop declining or cease it's aggressive selling pressure.

I don't have the data or tools to tell whether institutional investors will retain the selling pressure however we can use the model reading to help assess reward-to-risk.

Again considering the weekly chart, the share continues to trend lower, having breached the lower boundary of the bear flag structure.

The price is below the 8, 21 and 50-week moving averages, all of which are declining.

It is also below the 200-week SMA, which is also declining.

There is no clear support for the share, except the two swing lows at R70, which was tested in May and October 2020.

Until there is a clear improvement in candle structure and price action, trying to catch a falling knife is likely to yield more pain than pleasure.