SAP trade ideas
$JSESAP Sappi. Important to take note of fake breaksSappi broke a defined channel to the upside last week, followed by a fake out and break back into the channel. It is important to take notice of fake outs like this because it usually results in a selloff as a result of trapped longs positions. People buy the breakout in anticipation of a good move upwards (many times with leveraged positions) and when the share turns they are trapped in their positions. Trapped longs will many times sell at market to cover any losses. Even when a the price of the market moves up a little they sell to also cover losses. It creates sell momentum that can last longer that most think.
Stop losses in events like this can save you a lot of pain.
SAP: look at that bullish divergence!Using the RSI to calculate bullish/bearish divergence conditions over multiple time frames (daily, weekly, monthly).
Divergence period used is 8 periods (Fibonacci number).
Bullish divergence is when the price is making lower lows, while the indicator (RSI) is making higher lows.
Indicates underlying strengths. Bears are exhausted. Warning of a possible trend direction change from a downtrend to an uptrend.
SAP - Long Term SupportWe may derive the following from the Monthly SAP chart:
1. Price has been stuck in a major bearish trend.
2. A long term support level is approaching.
3. A bid is most likely to occur at the demand level (purple box).
4. Monitor price action and watch for further buying potential.
5. As always - maintain your risk.
Note: The views provided herein do not constitute financial advice.
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