The past week has seen a significant in the WHL share price with the stock retracing more than 10% from its all-time high level. The longer-term weekly trend remains bullish though so the oversold stochastic provides an opportunity for us to look at taking a long position to capitalise on a bounce or movement back in the direction of the long-term trend. Thursday's long-tailed candle provides potential evidence of this bounce starting to materialise as sellers pushed the price down to a low of R87.00 intraday before the buyers forced the price back up to a R89.40 close. This was followed by a solid bullish candle on Friday.
From a support and resistance perspective, there is a strong support area of confluence formed by the juxtaposition of lateral support at R87.00 and upward sloping trend lines going back to October 2013 and October 2014 respectively. Resistance levels come in at R92.50 and at the rounded R100.00 level.
Setup details as follows: Enter on a break of Friday's candle high at around the R90.00 level with an initial stop being a close below the R87.00 support zone. We would be a fading a break though the R92.50 resistance level so look to scale into the trade from R90.00 to R92.50 with the view to targeting the R100.00 level. This would yield a 2.0 to 2.5-1 reward to risk on the setup
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