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.