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SASOL has rallied about 33 percent since August
last year. It is “catching its breath” before what is likely to be a continuation of its uptrend to begin soon. Its chart shows a higher target.
Recommendation: Buy a new breakout.
Trend: Short-term sideways, medium-term up.
Strategy: Traders buy on a close above line 3. Or, at line 2 (more aggressive).
Daily
n Sasol has been moving sideways over the past month in a symmetrical triangle (lines 2 and 3).
While it can break out in either direction of this triangle, the odds favour an upside breakout.
n The short-term stochastic oscillator (momentum indicator) is relatively neutral.
n Buy on a close above line 3. (Line 3 is at R407.50 today, and it is declining at an angle of 30c a day thereafter).
However, more aggressive traders are to buy at line 2 (R392.50) if reached (and not wait for the breakout of line 3).
n Once it closes above line 3, it will set up a minimum target of R427.70.
n For buying a close above line 3, the initial stop-loss is a close below R399.
If buying at or near line 2 (more aggressive), the stop will be a close below line 1 (currently at R387.50).
Colin Abrams is an independent technical analyst who can be reached at colin@themarket.co.za. To subscribe to recommendations by the author, or attend courses, please go to www.themarket.co.za.
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