Sasol is one of the few resource stocks that has actually performed well over the past 18 months. It is undergoing a new upside break-out and heading towards its next upside target.
Sasol: Another upside break-out.
Recommendation: Traders buy.
Trend: Up on all main timeframes.
n After reaching its minimum upside target from a broadening formation (lines 2 and 3) recently, Sasol has moved sideways. Until last week, that is, when it broke out of a short-term symmetrical triangle (lines 4 and 5). This is giving it a new upside target, as the price continues in a solid uptrend above line 1 support.
n Traders buy it now for more short-term upside. Medium-term players buy it on any decent correction (of 5 percent to 10 percent).
n Its short-term target is R496, which is measured as the height of the triangle lines 4 to 5 projected up. Note, it also has a larger medium-term target here of R546 plus (not shown).
n Place your stop loss as a closing price below line 2 (R467) for traders. From R490, raise your stop to breakeven, that is, your entry price; and from R494 traders raise it again to a breaking of its prior one-day low (to protect profits).
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za.