Break out or Fake out by Sasol?

Sasol Limited (JSE: SOL) is moving and gapping higher from positive sentiment around oil, which has seen crude oil prices pushing higher for two months and counting.

The petrochemical company’s share price gapped higher on Thursday and was trading around 4.5% higher by midday as further output cuts by Saudi Arabia and Russia fuel higher oil prices. However, with global oil demand slowing and the Chinese economy heading into a deflation period, the demand for oil could be significantly impacted.

Looking at the chart below, we can see WTI (orange) and Brent (blue) Crude Oil Futures start to trend higher since the start of July 2023, with Sasol (green) following suit. The correlation between crude oil prices and Sasol’s share price will continue to be watched over the coming weeks as pullbacks in oil prices are expected.


Looking at the daily chart of Sasol Limited (JSE: SOL), we can see that the price has been in a consolidation range for a couple of months, with multiple breakout attempts from this range.

The current price action is pushing higher toward the next resistance level, around R265.74 (black dotted), which needs to be crossed and held to support higher prices. If the price retraces from this resistance level, the short sellers could potentially drive the price back down to R255.81 (red line).


The question remains if the current price action is a breakout of the range or a fake out which will see the price trend lower into the range once more. Levels to watch will be the R265.00 resistance and R255.81 support levels in the coming weeks.

Sources: TradingView, Koyfin

Piece written by Barry Dumas, Head of Client Education.

Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.