AECI Long Trade Setup

The longer-term trend on the weekly AECI chart remains bullish - albeit fairly choppy with a range bound-bias in place. The 21 week EMA remaining above the 89-week EMA for the past 2.5 years is also viewed as bullish. As at the end of last week we could also see the the stochastic advancing but not quite reaching the overbought level as yet.

Drilling down into the daily charts we see the daily stochastic moving oversold as price has retraced from around the R122.00 level. We also see a potential reversal painting today in the form of a green long-wicked candle.

Its worth mentioning again that AECI has very choppy trading action so its difficult to find "clean" support and resistance levels in the price action. So zooming out a bit and looking at the weekly support and resistance charts we can see the range-bound pricing action noted above with price moving between the R112.00 and the R122.00 levels and another resistance layer coming in at around the R130.00 level. At the moment we are operating close to the bottom of this range.

Our trade setup is going to be as follows. Enter the long at R114.00 which would represent a break above the potential reversal candle high. Set the stop as a daily close below R111.00 (we've pushed it slightly below R112.00 given the volatile nature of the price movements) with a target level of R122.00. This yields a target reward-risk of 2.67-1.