Sasol Limited (JSE: SOL) shares surged over 5.6% on Monday following a court victory regarding its sulfur dioxide (SO2) emissions regulation. The company won an appeal to implement load-based limits, a method alternative to concentration-based limits, for measuring emissions from its Secunda boilers. This decision allows Sasol more flexibility in meeting environmental requirements and avoids potential production disruptions. However, environmental groups criticize the ruling, arguing it will allow higher emissions than initially mandated.
While the court decision is a positive development for Sasol, the company still faces significant challenges. Sasol’s share price remains down over 13% year-to-date and over 35% in the past year. Pressure to reduce emissions and transition to cleaner energy sources remains high, and investor sentiment regarding Sasol’s environmental practices is a key concern.
Technical Analysis (4-Hour Chart)
The daily chart outlook presents a mixed picture. On the positive side, the share price is trading above the 50-SMA (blue line) and is perched around the 50.00% Fibonacci retracement level, indicating a potential bullish continuation. The RSI at 66.44 sits comfortably above 50, suggesting upward momentum.
With the upward-sloping RSI trading comfortably above the 50.00 level, a sustained push higher might bring the 61.80% Fibonacci retracement level (golden ratio) at 16,784 cents into focus in the near term. A sustained break above the golden ratio on significant volume would leave the 78.60% Fibonacci retracement level (17,752 cents) and the resistance at 18,984 cents firmly within the bulls’ reach in the coming sessions.
However, there are cautionary signs. The price remains below the downward-sloping 100-SMA (orange line) and 200-SMA (red line), signifying a longer-term downtrend. Additionally, the RSI approaching overbought territory could indicate a potential pullback. Therefore, renewed selling pressure and failure to sustain a push above the 50.00% Fibonacci retracement level would leave the 38.20% Fibonacci retracement level (15,426 cents) as the initial level of interest lower. A successful break below the 15,426 cents could confirm the bearish momentum and would leave the 23.60% Fibonacci retracement level (14,585 cents) and the major support at 13,226 cents as the next levels of significance lower.
Summary
The court ruling on emissions measurement offers some near-term relief for Sasol, reflected in the positive share price movement. Technically, a sustained push above the 50% Fibonacci level could see the price target the 61.80% level (16,784 cents) in the near future. Conversely, a failure to hold the current level could lead to a pullback towards the 38.20% Fibonacci retracement (15,426 cents).
Sources: TradingView, Trading Economics, Bloomberg, MarketWatch, Reuters, Engineering News, MoneyWeb.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
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. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
