Tiger Brands Short Setup

I was eye-balling a short on this stock a few weeks back and again there are signs of a potential opportunity to take a short position with the price action exhibiting many similarities to the setup at that time.

Looking at the weekly chart as a starting point, the signals are a bit mixed with the stochastic chopping around in a  fairly neutral zone. The moving average positioning of the 21 EMA and 89 EMA remains bearish but we can see a bit of a pullback into the space between the moving averages with the painting of a bullish engulfing candle at the end of last week.

The daily chart is reflecting more definitive short signals with the overbought stochastic starting to flatten out. Price has also retraced 100% of the move from its previous swing high and we have a bearish daily candle on Friday.

The support and resistance graph shows the recent range in which the price has fluctuated with the lateral resistance zone between R300 and R294 still well intact. There is a support level at around the R270 level as well.

Setup would be a short entry at around the current price level with a target at the R275 level and a stop above R300 - this would yield a reward-risk of around 4-1. Based on the some of the mixed signals I'm giving this setup a 61% grading.

Investec - Long Trade Setup

Looking at the Investec weekly chart as at the end of last week, we see that the stochastic was coming off near overbought levels and was heading into a potential buy-zone between the 21 and 89 EMA levels. The price trend on this stock on this longer-term basis is still very clearly bullish. We would thus be looking for a move down below the R110.00 level for a reversal.

On the daily charts we see this move down into the buy-zone and subsequent reversal playing out over the last few days. The stochastic moved oversold and with the painting of a bullish engulfing candle today has now started reversing back upwards over its signal line.

This graph clearly shows the longer-term bullish trend in place and also shows a strong support line where the price is currently reversing off.

The next graph is very busy but we can see a number of factors which cumulatively start supporting the high probability trading case here. First we can see the longer-term support line as per the previous graph coming in at the base of this one providing a good underpinning support level. There is a softer lateral support level coming in at R112 which was broken int he past few days but with the potential reversal on the cards, this could be viewed as a false break - which is quite bullish. Lastly we have a potential bullish flag pattern in place which if it plays out could see price targets coming in at the R119.50 and R125.00 levels.

Setup is as follows. Look to enter the long around the R113.00 level or better with a stop coming in as a close below R109.00. Initial target will be R119.50 with a secondary target at R125.00. This should yield an average target reward-risk of 2.6-1

Mr Price Long Trade Setup

As at the end of last week we saw Mr Price's weekly stochastic coming off of near overbought levels.Last week's candle was in fact quite ugly with a horribly long wick - pointing to potential weakness coming into this week. At the same time the stock has a clear strong trend in place with the 21 week EMA well above the 89 week EMA. The ideal pullback would be into the "buy-zone" between these 2 levels (a range between R215 and R245) as can be seen looking at the pullbacks over the past 12 months.

On the daily charts we can clearly see how this expected weakness played out during the course of this week with the price pulling back sharply and pushing the stochastic oversold. Today we saw price regaining the 100% retracement level (from its 05 August swing high) and the stochastic has now started moving bullishly from oversold conditions with the painting of a hammer candle formation on the day.

The support and resistance chart sees a very solid upward sloping support line going back over the past year which has been tested and respected by price a number of times. We can also see the top of the channel being shaped by a series of higher highs formed over the past few months.

Our setup will be to aim to enter around current price levels with price targets at R260 and R265 levels respectively. Our stop-loss would be a stop below R239.00 level. Average target reward-risk comes in around the 2.4-1 level.

City Lodge Long Trade Setup

On a weekly basis this stock has struggled to find direction in the short-term (this is further verified by a fairly listless stochastic) although the longer-term trend remains firmly bullish with significant headroom between the 21 week EMA and the 89 week EMA. As at the end of last week, we saw price close just below the 21 week EMA in the potential buy-zone

Drilling down into the daily charts we can see that price has moved to between the 61.8% and 100% retracement level from the high of 15 July 2015. The stochastic has also moved oversold but is now looking to break back up above its signal line with the painting of a near bullish engulfing candle today. What is however concerning is that the 21 day EMA is looking to potentially crossover negatively below the 89 day EMA so a quick recovery will be needed from here on in.

On the support and resistance graph we can see a nice little support wedge coming in for the stock around the current levels with overhead resistance at around the R148.00 level.

A potential setup would be to enter the long on a break above the R140.00 level setting the stop as a close below the current day's low of R136.50 with the view to targetting the R148.00 resistance level. Such a setup would yield a 2.2-1 reward-risk.

Mindfulness in trading

We’ve all experienced that response - the sinking sensation as we enter the trade on cue; watch it move into the money then do a quick reversal to juuust stop us out….before moving back into the money and hitting our target level. Why is it that the majority of the pain in that response comes from what happens after we get stopped out – when we are no longer in the trade? I put it down to an action-reaction instinct which is hard-wired into our make-up from a very early age. If we did well at school we got rewarded as a child. If we live good lives, we are told that we will be rewarded in the after-life. We work hard at our jobs and (sometimes) we get the bonus. Action and reaction. The pain we feel in the scenario sketched above comes from a breakdown of that axiom. Doing the correct thing and NOT getting what we regard as the just reward. So how do we bypass this hard-wired response? I think the answer lies less in the attempt to suppress the response but more in the mindfulness associated with appreciating that the response will take place, observing that it is taking place and simply understanding why it is occurring. Once we are able to naturally go through this process time after time, the energy behind the response tends to dissipate and we can safely take the next step in our trading career.

AVI Long Setup

AVI is presenting another potential trade opportunity. The longer-term trend on the stock still remains bullish with the 21 week EMA well above the 89 week EMA. The stock revisited its all time high level about 2 weeks ago but since then has pulled back and has dipped below its 21 week EMA in the "buy-zone"

On the daily charts, the pullback pushed the stochastic oversold but with the stock finding support around the 61.8% retracement level, the stochastic has now moved back up over its signal line. Today we saw a very bullish engulfing candle being painted despite the weaker overall market setting up a potential move back up.

The support and resistance levels on the daily chart also quite clear with strong overhead resistance at the R85.00 level and equally strong support coming in at R79.00. 

Our setup is to enter the trade around the R81.00 level setting a target of R85.00 and a stop as a close below R79.00 yielding a 2-1 target reward-risk ratio. Today's closing price is above that level so we would need a pullback intraday in order to achieve the desired target reward-risk level