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<p>TWO INTERESTING RESOURCES stocks are shown. The first is Sasol, which looks set for another leg up despite being in a large sideways range. The other chart is gold stock Harmony, which is currently testing important short-term support. Both stocks have pulled back over the past three weeks and are oversold. Consequently, traders look to buy both stocks for new short term rallies. </p>
<p>SASOL - HIGHER TARGET </p>
<p><img src='http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_col1060510.gif'> </p>
<p>Trend: Short term up, despite current pullback. Medium term up. Long term sideways. </p>
<p>Strategy: Traders on a close above line 3. </p>
<p>* Sasol has formed an inverse head and shoulders (as labelled), breaking out above the neckline (line 1) in late March. Its price recently rallied near to line 2 resistances and is now pulling back temporarily. </p>
<p>* The short-term stochastic oscillator (on top) is oversold again, which is a bullish setup. </p>
<p>* Traders buy it on a close above line 3 (Line 3 was at R297,80 on Friday 30 April and declining at an angle of R1,10/trading day thereafter). </p>
<p>* Regarding targets, while there's a theoretical target of R323 in place (based on the height of the inverse head and shoulders projected up) take some profits at R315,50 and the rest at line 2 (R317). That's because line 2 is such a well established resistance line. </p>
<p>* Place your initial stop-loss as a close below R293 (only once the breakout above line 3 has occurred for buying). </p>
<p>HARMONY - RANGE-BOUND </p>
<p><img src='http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_col2060510.gif'> </p>
<p>Trend: Short term sideways. Medium term technically down. </p>
<p>Strategy: Trade the boundaries between lines 1 and 2 for now. </p>
<p>* Over the past two months Harmony has traded in a sideways channel (lines 1 and 2). At the time of writing it was retesting line 1 (R68,50) and showing signs of rallying off it. </p>
<p>* The short term stochastic (on top) is giving a positive divergence from its oversold region. It's typically an early warning of a rally to come. </p>
<p>* Traders buy as close to line 1 as possible (R68,50). Then take profits near line 2 (R74 to R74,50). If it reverses down from line 2 then sell it short for a drop back to line 1. </p>
<p>* However, at some point there will be breakout of this sideway channel. If it breaks out to the upside - ie, closes above R74,70 then re-enter long (buy) for a rally to R81,80. But a close below line 1 - ie, below R68,50 - will be a short signal for a drop to R62,30. The odds favour an upside breakout. </p>
<p>* When trading inside channel 1-2 place your stop-loss as a close outside the channel - ie, a close below line 1 for longs or a close above R74,70 for shorts. </p>
<p>Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za. </p>
<p>SASOL - HIGHER TARGET </p>
<p><img src='http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_col1060510.gif'> </p>
<p>Trend: Short term up, despite current pullback. Medium term up. Long term sideways. </p>
<p>Strategy: Traders on a close above line 3. </p>
<p>* Sasol has formed an inverse head and shoulders (as labelled), breaking out above the neckline (line 1) in late March. Its price recently rallied near to line 2 resistances and is now pulling back temporarily. </p>
<p>* The short-term stochastic oscillator (on top) is oversold again, which is a bullish setup. </p>
<p>* Traders buy it on a close above line 3 (Line 3 was at R297,80 on Friday 30 April and declining at an angle of R1,10/trading day thereafter). </p>
<p>* Regarding targets, while there's a theoretical target of R323 in place (based on the height of the inverse head and shoulders projected up) take some profits at R315,50 and the rest at line 2 (R317). That's because line 2 is such a well established resistance line. </p>
<p>* Place your initial stop-loss as a close below R293 (only once the breakout above line 3 has occurred for buying). </p>
<p>HARMONY - RANGE-BOUND </p>
<p><img src='http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_col2060510.gif'> </p>
<p>Trend: Short term sideways. Medium term technically down. </p>
<p>Strategy: Trade the boundaries between lines 1 and 2 for now. </p>
<p>* Over the past two months Harmony has traded in a sideways channel (lines 1 and 2). At the time of writing it was retesting line 1 (R68,50) and showing signs of rallying off it. </p>
<p>* The short term stochastic (on top) is giving a positive divergence from its oversold region. It's typically an early warning of a rally to come. </p>
<p>* Traders buy as close to line 1 as possible (R68,50). Then take profits near line 2 (R74 to R74,50). If it reverses down from line 2 then sell it short for a drop back to line 1. </p>
<p>* However, at some point there will be breakout of this sideway channel. If it breaks out to the upside - ie, closes above R74,70 then re-enter long (buy) for a rally to R81,80. But a close below line 1 - ie, below R68,50 - will be a short signal for a drop to R62,30. The odds favour an upside breakout. </p>
<p>* When trading inside channel 1-2 place your stop-loss as a close outside the channel - ie, a close below line 1 for longs or a close above R74,70 for shorts. </p>
<p>Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za. </p>
