Nedbank has spent most of this year in a bearish downtrend trend. After creating a high of R316.50, Nedbank fell as far as R223.58. It has rebounded off the low, but the stock is finding itself at a key resistance level once again.
The devil, however, is in the detail so let us analyse the chart.
The first thing to note is the declining trendline. Nedbank bounced off this bearish trendline at the end of August and has done so again over the past two weeks. It is very fitting that it is also occurring at the same levels of the 100- and 200-day EMAs. The fact that Nedbank is stuck at such a key level indicates it is a strong area of resistance.
There is also bearish order to the 3 EMAs while the Slow Stochastics recently had Nedbank at overbought.
This stock is setting itself up for a good short trade.
Action: Place a Limit order to SELL at R255 with a Stop Loss set at R272. I will aim to take profit at R240 and R225 respectively.