Nickel index quite strong last week increasing by 6% and potentially heading to test August highs. WSA.ASX has been supported at the 61.8% Fibonacci retracement and closed above a multi-month trend line with volume.

WSA.ASX

Western Areas Limited (WSA.ASX) is an Australian based nickel sulphide explorer and producer with its core 100% ownership asset in Forrestania Nickel Operation.

 Key Points:

  • Caution – Price holding below the 200 EMA
  • Caution – Price holding below the 50 EMA
  • Would like to see price hold above the trend line and protect $2.20
  • Fibonacci 61.8% retracement support (March low – July high range)
  • RSI breaking trend, 50 mid-point, and range simultaneously for momentum
  • Price must hold $2.20 and signal with bullish candle or if 21 EMA crosses 50 EMA.

 

Key Levels:

Support – $2.10, $2.20

Resistance – 50 EMA, 200 EMA, $2.50, $2.80

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – $2.21

Supporting Entry – $2.25

 

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish PiercingCandlestick

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

 

IF: Price breaks below $2.02 – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

 

Reward / Reward Targets:

Optimal Entry $2.21 – Target 1 $2.50 = 1.5x Reward to Risk

Optimal Entry $2.21 – Target 2 $2.80 = 3x Reward to Risk

Supporting Entry $2.25 – Target 1 $2.50 = 1.3x Reward to Risk

Supporting Entry $2.25 – Target 2 $2.80 = 2.5x Reward to Risk