South Africa 40 Cash Index price breakout not yet convincing
The South Africa 40 Cash Index is expected to adjust for a dividend of 54 points
South Africa 40 Cash Index
Technically we have now seen a break (close) above range resistance at 70850, however the small-bodied candle (6 May), with a long upper wick, suggests a weak conviction to the move. This low conviction breakout suggestion is furthered by today’s candle, which is drifting back below the 70850 level.
A bearish price reversal would confirm if the close of today’s candle is lower than the low of the preceding candle. In this scenario, 69700 becomes the initial downside support target, while a close above the previous high at 71370 might be used as a stop loss indication.
Should the bearish price reversal fail to confirm, and instead we see a strong move higher in coming days, traders might then prefer to wait for the first pullback from this move for long entry. Should this scenario instead manifest, we will update guidance accordingly with targets and failure levels.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying. The adjustment is currently estimated at 54 points and set for the 7th of May 2024.
South Africa 40 Cash Index (previous)
The South Africa 40 Cash Index has produced multiple upside breakouts since our previous note. The move above 67940 saw the initial target at 68515 realised, before a break of this level has produced a move through to the 70850 level.
Range traders might be considering closing their long positions at current while waiting for a new opportunity to emerge.
For new long positions, traders might hope to see a break (close) above the 70850 level, followed by a pullback thereafter.
For new short positions, range traders might prefer to see a bearish price reversal off the 70850-resistance level, accompanied by a move out of overbought territory.
Should either of these scenarios manifest, we will update our guidance accordingly with targets and failure levels.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying for the week commencing 29 April 2024. The adjustment is currently estimated at 18 points and set for the 30th of April 2024.
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