South Africa 40 Cash Index downside break and dividend reminder
The SA40 Cash Index downside break moves the bourse into oversold territory.
South Africa 40 Cash Index (15 August 2023)
The South Africa 40 Cash Index rallied to resistance, before producing the downside break scenario suggested in our previous note (below). The downside break of the 71125 level, marked with the black arrow, was preceded by a bearish reversal (circled black) off the 72370 level.
The index has fast moved towards, although not yet realized the 69760-support target. In so doing, the index has now also moved into oversold territory.
Traders who are short might consider looking to exit positions just above the 69760-support level. The previously guided stop level of 71900 (no longer labelled on chart), might now be moved to the 70770 level to ensure a ‘risk reduced’ trade scenario.
Large cash adjustment expected.
While considering exits, traders will want to note that the South Africa 40 Cash Index is expected to adjust for a dividend in the underlying, currently expected to be around 209.7 points. The adjustment will take place late Tuesday afternoon (15 August 2023).
South Africa 40 Cash Index (previous)
The South Africa 40 Cash Index's reversal from resistance and overbought territory has seen the price move and temporarily settle at the 71125-support level.
A break of support (71125), confirmed with a close below could unlock further decline, with 69760 the initial downside target from the move. In this scenario, traders might consider using a close above the high at 71900 as a stop loss consideration for the trade.
For long positions, traders might instead prefer to see a rebound off support and close above the 72370-resistance level, before targeting a move towards 74180. In this scenario, a close below 71900 might be used as a stop loss consideration.
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