South Africa’s largest steel producer, ArcelorMittal, has gained the interest of market participants once again as China signals measures to rescue its vailing property sector.
The price action on ArcelorMittal South Africa has been in a consolidated phase for some time now and has started to move higher off the back of the China property news. The JSE share’s price tested the 493c resistance level over three days but could not break out of the consolidation. The price action looks more like a fake out than a breakout to higher price levels.
In this instance, we would wait for the price action to form a rounding formation (red arc) supported by the 50-day simple moving average (SMA) before looking to the long side. For the bear case, if this does not happen, we could expect sellers to step in and drive prices lower to the 422c share support level.
Looking for the formation of the rounding pattern and the 50 SMA to support the price action before entering any trades. Current price action could be a fake-out pattern (green circle) which could support the bear case if not supported by fundamental factors.
Sources: Trive South Africa, ArcelorMittal South Africa Ltd, TradingView
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