FirstRand: 200-DMA Rejection + Bearish Reversal (Follow-Through From Model; 7700c to Below 7200c)

Research Notes For 16 to 20 June > https://www.unum.capital/post/r1620june

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Previous Post (Monday 09 June): FSR Running 30%. Potential Resistance Into The 200-Day SMA. The share has rebounded sharply, with today's high being 30% above the buy range of 5800c to 6000c. The price action model reading as at the time of analysis is as follows:

Here's a breakdown of the current price action:

• The 7-day trend is indicated as "High Bullish Momentum / Approaching Overbought," while the 14-day trend is "Bullish."

• Comparison: Both the short-term (7-day) and slightly longer short-term (14-day) trends indicate upward momentum ("High Bullish Momentum / Approaching Overbought" and "Bullish" respectively). This suggests a consistent buying pressure across these timeframes. The "Bullish" 14-day trend reinforces the "High Bullish Momentum / Approaching Overbought" 7-day trend, indicating that the recent strength is part of a broader upward movement.

Potential Trading Approach for FSR:

• Short Term (Approximately Next 1 to 10 Trading Days):

  • The model notes, "Attempting To Advance Whilst In A Bullish Regime-If It Pulls Back Use The Prior Session Close or 8-EMA As An Accumulation Zone."

  • Approach: While the stock is attempting to advance in a bullish regime, if it pulls back, use the prior session's close or the 8-period Exponential Moving Average (EMA) as an accumulation zone.

• Medium Term (Approximately Next 2 to 4 Weeks):

  • The model indicates "In or Commencing Upward Trend However Strongly Consider The Potential Failure To Hold Prior Session Range Highs Which Will Create A Tactical Short-Sell Opportunity."

  • Approach: The medium term suggests that the stock is in or commencing an upward trend. However, strongly consider the potential for failure to hold prior session range highs, as this would create a tactical short-sell opportunity.

• Long Term (Approximately Next 5 to 8 Weeks):

  • The model states, "In or Commencing Upward Trend However Strongly Consider The Potential Failure To Hold Prior Session Range Highs Which Will Create A Tactical Short-Sell Opportunity."

  • Approach: The long-term perspective also indicates that the stock is in or commencing an upward trend. Similar to the medium term, it's crucial to strongly consider the potential for failure to hold prior session range highs, as this would create a tactical short-sell opportunity.

Overall Trading Considerations for FSR:

• Consistent bullish momentum: Both short and slightly longer short-term trends are bullish, supporting upward price action.

• Short-term caution: Despite the buying pressure, the model advises using pullbacks to the prior session's close or 8-EMA as accumulation zones.

• Medium-term and Long-term caution: Both the medium and long-term perspectives highlight a significant caution: the potential failure to hold prior session range highs, which would create a tactical short-sell opportunity.

In summary, for FSR, the current view is bullish across short to long terms, with strong momentum in the short term. However, traders should be acutely aware of the potential for failure to hold prior session range highs, as this is identified as a key trigger for tactical short-sell opportunities across all timeframes beyond the very short term.

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Previous Post: Actionable Areas: FirsrRand

(Published Saturday 05 April for Monday 07 April)

Original Post: https://www.unum.capital/post/fsraction

FirstRand (FSR) is down 29% from it's Sept-2024 peak, with the share trading near it's June lows. It's not inconceivable that the share could trade down at the 5800c to 6000c range, which is a medium term support range. At current levels, oversold conditions are already present which reflects aggressive selling pressure however, also raises the probability of an ultra short term rebound. Last close: 6293c

FSR Daily Chart as of the close on Friday 04 April

Lester Davids

Senior Investment Analyst: Unum Capital