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Two interesting charts are shown this week: one of local bellwether stock Anglo American and the other the copper price (in US dollars). Anglo is recovering well after a February/March worldwide sell-off in stocks. In fact, it’s given a new upside breakout.
Meanwhile, the copper price – a general barometer of the global economy – has broken out to the upside from a consolidation phase. Both charts point to higher levels to come.
Anglo American – Higher target
Trend: Short term up. Medium term sideways. Long term up.
Strategy: Traders buy for further upside.
* Early in April, Anglo American [JSE:AGL] broke out of a broadening formation (lines 1 and 2). Last week it went further and broke out above an important short-term resistance line (line 3). It now looks set to continue higher over the weeks ahead.
* The short-term stochastic oscillator (on top) is still relatively overbought. However, any pullback is expected to be minor. Furthermore, the weekly stochastic is bullish.
* Traders buy at current levels or better (it was trading at R365,50 at the time of writing). Note: If it pulls back to line 4 (R353) at any stage within the coming days, buy then.
* The minimum upside target is R391,50 (ie, the height of the broadening formation projected up). Take half profits there and continue with a breaking of its prior one-day low as your stop (to allow for further upside). Take all trading profits at R400, if reached.
* Your initial stop is a close below R347,50. But once its price closes above R384 move your stop up to a close below R360.
COPPER – Upside breakout
Trend: Short term up. Medium term sideways. Long term up.
Strategy: Buy.
* The copper price has formed a broadening formation (lines 1 and 2). At the time of writing (US$98,20) it had just broken out above line 2 and therefore has a significantly higher target (short term). That will also be bullish for stocks.
* The short-term stochastic isn’t yet overbought but, importantly, the weekly stochastic is oversold, which is a bullish sign.
* Traders buy at the $98 to $100 level or better (eg, ideally, if it pulls back towards $94).
* The minimum upside target is $106,50 – ie, the height of the broadening formation projected up. Take at least half profits there, but keep some for further upside potential to line 3 at $109.
* Place your initial stop-loss as a closing price below $93,99 (spot price). Once the price gets to its minimum upside target of $106,50, take half profits and use a trailing stop – such as a breaking of its prior two-day low (to allow for capturing further upside).
Please note: For more recommendations and charts by the author on shares, indices, commodities and currencies, please go to www.themarket.co.za.
Meanwhile, the copper price – a general barometer of the global economy – has broken out to the upside from a consolidation phase. Both charts point to higher levels to come.
Anglo American – Higher target
Trend: Short term up. Medium term sideways. Long term up.
Strategy: Traders buy for further upside.
* Early in April, Anglo American [JSE:AGL] broke out of a broadening formation (lines 1 and 2). Last week it went further and broke out above an important short-term resistance line (line 3). It now looks set to continue higher over the weeks ahead.
* The short-term stochastic oscillator (on top) is still relatively overbought. However, any pullback is expected to be minor. Furthermore, the weekly stochastic is bullish.
* Traders buy at current levels or better (it was trading at R365,50 at the time of writing). Note: If it pulls back to line 4 (R353) at any stage within the coming days, buy then.
* The minimum upside target is R391,50 (ie, the height of the broadening formation projected up). Take half profits there and continue with a breaking of its prior one-day low as your stop (to allow for further upside). Take all trading profits at R400, if reached.
* Your initial stop is a close below R347,50. But once its price closes above R384 move your stop up to a close below R360.
COPPER – Upside breakout
Trend: Short term up. Medium term sideways. Long term up.
Strategy: Buy.
* The copper price has formed a broadening formation (lines 1 and 2). At the time of writing (US$98,20) it had just broken out above line 2 and therefore has a significantly higher target (short term). That will also be bullish for stocks.
* The short-term stochastic isn’t yet overbought but, importantly, the weekly stochastic is oversold, which is a bullish sign.
* Traders buy at the $98 to $100 level or better (eg, ideally, if it pulls back towards $94).
* The minimum upside target is $106,50 – ie, the height of the broadening formation projected up. Take at least half profits there, but keep some for further upside potential to line 3 at $109.
* Place your initial stop-loss as a closing price below $93,99 (spot price). Once the price gets to its minimum upside target of $106,50, take half profits and use a trailing stop – such as a breaking of its prior two-day low (to allow for capturing further upside).
Please note: For more recommendations and charts by the author on shares, indices, commodities and currencies, please go to www.themarket.co.za.
