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