The trade war cycle turned negatively once more last week and with US GDP data due out on Wednesday this week, it may just become apparent how hard this trade war is biting. We cannot predict what the data is going to be like, although we think it is safe to assume that things are not going to look so great. Sorry Donald. Nonetheless in charts we trust. So let’s look at some setups this week.
Truworths once again finds itself near the bottom of its range. We have been looking for a short opportunity here and it has even given us a false trigger in the past few weeks. Although the bias is toward a bearish break out, we need to watch the support level around R50.20 for signs of strong buying and stay open to the idea that this could in fact be a long from support.
Shoprite looks to have made a Bear Flag formation on the daily chart as well as a small potential Head and Shoulders on the shorter time frames. We would like to see a clean break below R130 before we will be convinced that the primary trend is once again down.
Although the last two candles are somewhat bearish, LHC looks to have made a Rounding Bottom formation and strictly technically speaking, did close the week above the trigger line for a long. We think this creates a very high risk-reward long trade setup.
Some time ago we were looking for a Head and Shoulders pattern to play out on Gold, which of course did not happen. Keeping an eye on the chart though, it would appear that the $1410 level is still in play as Gold broke and retested a major support level and formed a small Bear Flag. Given the trade war ‘bad news’ last week, some positive news flow could likely be the catalyst for this trade.
Well, there is a lot to say here but we will be brief. Key support around the $6700 to $6000 area has got to hold this week if we hope to see Bitcoin heading higher in the short-term. The secondary and tertiary trends are both down though and we would expect Bitcoin to remain under pressure. Thinking a few weeks / months ahead, a move down to the $4000 level or below would fit our overall expectation and reinforce our long-term bullish narrative.
Aspen still seems on track to close the gap at R136. We will be watching the current consolidation for a break either higher (to move toward gap close) or lower (to move toward support). A higher break would likely be a long trigger, while a break lower would have us waiting to buy in the R111 to R113 zone. We believe the first scenario is more likely, although the second scenario would be preferred as it offers a better risk-reward trade setup.
Anglo seems to be on track to retest support. We will be watching to see how it reacts when this level is reached as trend support will come in to play just below horizontal support. Our overall view is bullish in the medium and longer-term, although the chart setup (especially on intraday time frames) seems a little bearish at the moment.
*Please note that these trade ideas for part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.