Foschini Long Setup

Looking at a weekly chart of this stock we see that it has over the past 4-5 weeks been attempting a rally from oversold conditions following a substantial pullback from its Mid-April 2015 all-time high level. Overall with the 21 week exponential moving of price above the 89 week exponential moving average, it's also plausible to conclude that the longer-term trend of the stock remains bullish and we also see evidence of a potential positive reverse divergence playing out on the chart.

Drilling down into the daily charts, we see that over the last 2 weeks there has been a substantial retracement in price resulting in the stochastic on the daily chart moving oversold (now crossing back up over its signal line) and we have been looking for an opportunity to enter a long position to capitalise on a move back in the direction of the overall long-term trend as noted above. The potential for this materialised with the painting of a long-tailed candle on Wednesday 08 July.

From a support and resistance perspective, there is a strong lateral support level at around the R147.00 to R144.00 level going back exactly 3 years to July 2012. There are also potential overhead resistance levels coinciding at the R165.00 level.

Setup details as follows: Enter at R149.50 on a break of Wednesday's high - setting an end of day stop below support as a close below R143.50. Target is set at the R165.00 resistance level yielding an overall target reward-risk of 2.5-1 on the trade setup