Wind at the back

Can Sasol go back to its former glory at highs of around R630. Well let’s look at the possibilities and the risk of finding out if it can.

The area between R200 – R240 has strong support and an area of strong memory. The market defended that level from 2005. Until the COVID-19 crash of March 2020 cracked it open. The stock dropped almost 90% in a couple of months. Not being another Steinhoff the stock has since recovered that entire fall and back around the strong area of memory. The Market remembered this level again. The fall from grace wasn’t an unwarranted one. Elevated debt levels to fund what proved to be a disaster for the company. The company reduced the debt quite significantly as reported in the year end June 2021 financials. Oil prices and a weak rand saved the company from a rights issue

Let’s look at what’s been happening the past year since the March lows.

The stock formed a nice long base with an ascending triangle pattern. In the process breaking back above the 50 week EMA. It came back to test it after remembering the R240 level and holding quite well. With a longer term stop just below the 50 week EMA around R190 Targeting the R650 level presents a brilliant 1:7.6 risk:reward.

Zooming to the daily chart

The stock broke the R240 level and ran into some selling at R250 since April 2021, but the stock held both the 50 & 200 day EMAs. The market remembered the R250 level again testing it on 16 September 2021. If we can close above the April 2019 close The doji that proved to be the undoing of the rally would then confirm the trade

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