South Africa 40 Cash Index forms bearish price reversal off resistance
The SA40 Cash Index short term rally finds an end with a bearish reversal off resistance and from overbought territory.
South Africa 40 Cash Index
The bearish reversal (circled black) we were looking for on the South Africa 40 Cash Index has formed just before the 74180 level, and from overbought territory. The price has since moved quickly to test support at 72370.
Traders fortunate enough to find short entry might consider moving there stop from the reversal high to a close above the 73180 level.
A price close below 72370 would suggest further downside with 71125 the next support target. A close below the 72370 level might also suggest new short entry positions with a stop loss considered on a close above the 73180 level as well.
South Africa 40 Cash Index (Technical Tuesday 1 August)
The South Africa 40 Cash Index broke out of the 71125 to 72370 range, meeting the long trade criteria. The price is now roughly 100 points away from the 74180-resistance target and moved into overbought territory.
Traders who have been long into the breakout might consider exiting their positions on the overbought signal near resistance.
Traders looking for short positions might prefer to see a bearish price reversal at either the 74180 or 75250 resistance levels, supported by a move out of overbought territory before finding entry. In this scenario 72370 becomes the initial support target from the move, while a close above the reversal high might be used as a stop loss consideration for the trade.
Should a bearish price reversal not form before the 75250-resistance level, and instead a price break of this level manifest, this could instead suggest a renewal of a longer-term uptrend. In this scenario we would be looking for the first pullback from the new high to consider long entry.
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