Bearish divergence on MTN
The 
MTN share price has steadily improved since creating a low of R75.05 in February. The recent uptick has seen it touch a short-term high of R111.23. The upward momentum seems to be reducing however, and the stock has struggled to break above the R110.00 horizontal resistance.
This solid resistance could potentially form a turning point for MTN. Especially with the bullish run of the last few months running out of steam.
What interests me more though, is the bearish divergence on the MACD.
Have a look at the chart. MTN reached R106.47 in April and then R111.23 in June. In other words, the stock went higher, yet the MACD went lower. Now MTN is again near the high of June but the MACD is still going lower.
That is a classic bearish divergence and indicates we might see a change in trend from bullish to bearish. On top of that, the Slow Stochastic also shows MTN to be overbought at current levels. This is adding to the bearish sentiment.
Action: Place a Limit order to SELL at R110.00 or better with a Stop Loss set at R122.50. I will aim to take profit at R100.00 and R90.00 respectively.
MTN share price has steadily improved since creating a low of R75.05 in February. The recent uptick has seen it touch a short-term high of R111.23. The upward momentum seems to be reducing however, and the stock has struggled to break above the R110.00 horizontal resistance. This solid resistance could potentially form a turning point for MTN. Especially with the bullish run of the last few months running out of steam.
What interests me more though, is the bearish divergence on the MACD.
Have a look at the chart. MTN reached R106.47 in April and then R111.23 in June. In other words, the stock went higher, yet the MACD went lower. Now MTN is again near the high of June but the MACD is still going lower.
That is a classic bearish divergence and indicates we might see a change in trend from bullish to bearish. On top of that, the Slow Stochastic also shows MTN to be overbought at current levels. This is adding to the bearish sentiment.
Action: Place a Limit order to SELL at R110.00 or better with a Stop Loss set at R122.50. I will aim to take profit at R100.00 and R90.00 respectively.
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