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JSE Mid-Cap Stock Long Trade Idea

April 16, 2024
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Josh Viljoen
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Josh Viljoen

Long position swing trading opportunity with a good risk to reward ratio

 

I recently came across an attractive trading opportunity when taking a look at this JSE mid-cap stock. I think this stock could offer a good risk to reward swing trading opportunity If held for the next few months. The stock in question is Grindrod Shipping which trades on the JSE under the ticker symbol GSH.

 

Weekly Chart:

https://www.tradingview.com/x/OxFNIAtI/

When taking a look at the weekly chart for Grindrod shipping we can see that the share has been in a strong uptrend since the start of 2021. The share price reached a high of R470 in May this year but has slumped down all the way to R278 a share in the past 3 months. Looking at the chart we can see that there is also a horizontal level of support around R270 shown by the grey rectangle.

 

From the weekly chart we can that the share price is currently testing the black trend line. This trend line has acted as level of support and has been tested on multiple instances since the start of 2021.

 

Daily Timeframe:

https://www.tradingview.com/x/cHYVi7KL/

From the daily chart we can see that around R270 has acted as level of resistance previously in 2021 which may now act as a level of support where market participants look to accumulate shares at these prices. Before taking a long position, I will want to a see a bullish reversal on the daily timeframe. This could come in the form of a bullish engulfing candle. If the share price however closes below that grey zone, I wont be looking to take a long position.

 

Moving Averages:

https://www.tradingview.com/x/YoC96Mhc/

The share price is currently hovering just below the 200-day moving average (orange line). The 200-day moving average has been trending steadily upwards since the start of 2021 and this may act as a level of support at the current price. The share price has however dropped well below the short term 50-day moving average (red line) highlighting the short-term downtrend we are seeing.

 

Relative Strength Index:

https://www.tradingview.com/x/4rEMacPm/

The relative strength index dropped below 30 and has reached oversold territory. Given that share is currently oversold it may now be a good time to accumulate shares while it is out of favour with the market. 

 

Possible Trade:

https://www.tradingview.com/x/mnsPCJ5A/

If I had to place a trade on Grindrod Shipping I would like to enter close to R260 at the current level of support. Id place my stop loss below the level support around R230 for some breathing room. For the take profit Id be targeting the previous highs around R450. This put together gives you a potential trading opportunity with a risk to reward ratio of 5 to 1. I would however first wait for strong sign of a reversal in the downtrend before placing a long position.

 

This is not investment advice but merely for educational and informational purposes.


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