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.