Welcome back load shedding. And also welcome back war in the Middle East. The combined impact of these two factors will likely make it a very difficult week for the Rand. Thus, our banks longs from last week are looking very fragile. Overall though for this coming week, we expect that news flow will be dominated by the escalation of tensions and military actions in the Iran and Iraq regions and think that we will probably see some sort of panic expressed by markets. Therefore we have to be rather on top of news flow and sentiment as things can change both quickly and drastically.
As a side note; and something that we feel is very important to talk about, we want to mention Australia and the ravaging bushfires that the country is struggling with. If anyone reading this would like to donate to help the fight against the fire and destruction of the natural habitat and wildlife, you can do so by clicking here. WIRES are often the first responders to animal related emergencies and are being overwhelmed by over 600 emergency calls a day. They could really use the help to try and save as many animals as possible. Every cent helps. So please consider giving them whatever you think these trade ideas are worth to you. R1000 for three months? No. Just pay it forward. Help the critters that need our help. Donate.
So let’s begin with the Rand. All seemed well and on track for the USD/ZAR to trade to that R13.85 support zone, until, well, the U.S. practically declared war on Iran by literally blowing up Iran’s 2nd in command. So ok, now the game has changed a little. The USD/ZAR never managed to retest that support zone and seems to be heading back to R14.50. We think that R14.50 is an inflection point as that was the previous support. If the USD/ZAR trades through that level with ease, it is rather likely that it tests the upper resistance levels around the R15.45 area. For now though, We expect that the Rand will be soft on the ‘risk-off’ news regarding Iran, and also the double-whammy of load shedding starting again this weekend.
Given all the war talk and the fear that creates, we saw a huge move from Gold and local gold stocks on Friday. Odds are that this persists in the coming week and thus we have two potential trades.
HAR has been range bound for around three months now and seems to have finally made a decisive break of the range to the upside. A simple range break target on the setup looks for R65.42 as a target. The stop loss would be in the middle of the range. Technically the closing price on Friday triggered the long, so entry would be on Monday morning.
ANG has a very similar setup to HAR, although might be offering a better entry. Splitting hairs here, ANG did confirm a range break on the close on Friday, by closing just 10c above the trigger level for the setup. Again the entry would be Monday morning with a stop loss in the middle of the range (based on a daily closing price) and a simple range target R65 higher.
Tracking SHP over the last while, it appears that finally the share is ready to make the move down to our target. It’s been a little choppy and non-committal, but given the entire backdrop, it feels like a fairly safe trade from here. The chart below is our old chart, which means that we have not changed any of the annotations of the chart, showing the original setup and target. Not shown on the chart is a range between R135 and R138, which broke lower on Friday. We would like to see R100 from here.
Again with the old chart. The original setup broke, was re-tested and has now broken again. We like this short as long as the overall global sentiment remains ‘risk-off’.
We’re not sure if we should call this Impala, or ImpalaCoin… the power of the palladium rally…!? In any case, we see a similar setup as before and will be watching for a break higher. Yes it has run incredibly hard and yes there are a thousand traders picking tops, but we like to follow trends and if precious metals keep running, we will keep buying into strength.
We have an open short on RNI, although we are thinking that we should swing it long. The thesis for the short was based on Rand strength and a few headwinds in the tobacco industry. Now though, it would seem the Rand Hedge effect will dominate the price action on this stock and we would like to get out of the way on the short side. That said, a daily close aboe R290 would very likely trigger a long trade for us.
NPN has been somewhat tricky since the unbundling on PRX and for the most part we have been avoiding it. We note now that Friday’s closing price had given us a long trigger, although only just. Our initial target is somewhat conservative at this stage as we are looking for R2450. We think that if the stock can get up and clear of that level, there might be more upside on the table. For now though, we like the high probability setup that we have here and will likely be taking longs on Monday.
*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.