The Dow Jones Global Index pulled back to confirm horizontal and Fibonacci support and the oscillator is in buying territory. This is a buying opportunity in an ongoing bull market.
The sideways consolidation on Sasol looks like a "head-and-shoulders" reversal pattern, but is it?
Firstly, we must remember that a pattern is only completed when and if, the neckline breaks. Before that it is a sideways consolidation, with no strong directional meaning. The only indication that such a sideways consolidation might be completed to form a "head-and-shoulder" reversal pattern is if we see a negative divergence on a higher timescale. In this case we should see a negative divergence on the weekly MACD of RSI to confirm the likelihood of a break to the downside.
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Line -1- shows a divergence over the weekly Stochastic oscillator, but there is no divergence on the MACD. This in my book is a sideways consolidation in a longer-term uptrend. The price can drift sideways for a few weeks untill the stochastic reaches oversold levels.
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Sasol is a proxy for the the oil price in Rand. This is the picture that drives the price of Sasol. The MACD (green histogram) made a new high along with the price, telling us that the longer-term trend is positive. The weekly stochastic showed a negative divergence; warning of a shorter term correction which we are currently experiencing. The price can drift sideways or can even come down further but any pullback will be a buying opportunity in a longer-term bull market.
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If we look at the daily graph of Sasol, we see the price is confirming horizontal as well as strong Fibonacci support (green line). A stop for long positions will be just under 350. That will be a close under 345.
