Tiger Brands Short Setup

Looking at the weekly chart of Tiger Brands, we can see that after consolidating and basing out in mid-June it's been slowly retracing over the past 6 weeks. This has however pushed the weekly stochastic towards the overbought level - although the stochastic looks like it has a fair bit of momentum behind it as at the end of last week as shown on this graph. The 21 period EMA as indicated by the blue line has crossed below the 89 period EMA which could be viewed as an indication of a bearish longer-term trend. We also note that the retracement is now at around the 61.8% level.

Drilling into the daily charts we can see evidence of a fair bit of choppiness over the past couple of weeks. The stochastic is generally looking overbought with some evidence of negative reverse divergence . The stochastic is now also starting to reverse from overbought conditions as is further evidenced by the price action over the past 3 days.

On the support and resistance chart we see clear evidence of the overall downtrend this stock has been experiencing over the past 6 months with a series of lower highs and lows punctuating the 6 month price action. The R294.00- R300.00 level also appears to be acting as a fairly solid resistance (previously support) zone over the past year. I don't use these very often but there is also a potential head and shoulders formation as marked up on the chart with price pulling back nicely to the resistance level to set up a short entry.

Entry setup as follows: Enter near break of previous candle low at R294.00 with an initial stop being an end of day clsoe above the  R300.00 resistance zone. Target is set near the prior lows at R274.00 yielding a 3.33-1 reward-risk setup.