Monsanto looks primed for a tumble
The past week and a half has seen the materials sector rally sharply along with the broader market, with the sector heading right back into its previous breakdown point (i.e. into resistance, illustrated by the lateral black line).
Shares of agricultural products company Monsanto (MON), part of the materials sector, also rallied sharply but have now bumped back into an area that previously served as support.
Looking at the multi-year weekly logarithmic chart of Monsanto's shares, note that with the recent selloff, its 2010 uptrend was broken while upside momentum has been waning for about 22 months.
Source: Saxo Bank
On the daily chart, we see this one-and-a-half-week rally has found resistance somewhere in the $112.80-$114.80 area, which currently also coincides with the stock's 200- and 50-day simple moving averages (red and yellow lines).
Management and risk description
With the bearish reversal from last Thursday, traders now have defined risk to lean against — namely Thursday's intraday highs. Any break back above there, particularly on a daily closing basis, would turn the stock from bearish to bullish on a near-term basis.
Entry: Short Monsanto using the CFD at $113.00 or lower.
Time horizon: Two to three weeks
— Edited by Michael McKenna
Non-independent investment research
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