Tiger Brands: Technical setup

After breaking out of its range consolidation, the price of Tiger Brands has returned to test previous support.

The breakout alludes to a possible new directional move, which in this scenario is anticipated as downwards on Tiger Brands.

The retest of the breakout area provides a second opportunity to trade the breakout. It also provides an improved risk/reward ratio when using the midpoint of the range to gauge a stop-loss level.

A target is projected from the breakout area proportionate to the height of the range.

 Current price  30700c
 Initial target (initial Breakout low)  29700c
 Ultimate target (height of range projected)
 29300c
 Failure level (midpoint of range)
 31150c
 Stop-loss distance 
 450c (current price – failure level)
 Initial reward  1000c (initial target – current price)
 Ultimate reward  1400c (ultimate target – current price)
 Initial Risk/Reward ratio
 1: 2.2
 Ultimate Risk/Reward ratio
 1: 3.11

 

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