South Africa 40 Cash Index price consolidates ahead of key economic data
The South Africa 40 cash Index is currently testing short term range support ahead of some key economic data scheduled for later this week.
The South Africa 40 Cash Index rebound off range support has fallen short of our initial resistance target and is now returning to support revised at 72840.
A short term rangebound environment between these levels 72840 and 75250 remains, while the longer-term trend bias is still assessed as up.
The 20MA (red line) whipsawing through the price highlights the near term rangebound consolidation, while the 50MA (green line) trading above the 200MA (blue line) confirms the longer-term uptrend still in place.
In line with the longer-term trend bias, our preference remains to keep a long bias to trades on the index, although we are looking to find entry at present.
For long entry we would like to see a bullish reversal off the 72840-support level before targeting a move back towards 75250. In this scenario a close below the support low at 72840 might be used as a stop loss consideration for the trade.
Should we not get a reversal off the 72840-support level, but instead a downside break (confirmed with a close below), 71780 becomes the initial downside support target from the move. In this scenario, our preference would be to wait for weakness to play out and look for long entry on a bullish price reversal closer to either the 71780 or 69240 support levels for long entry.
We are still not looking to short the index while we believe the longer-term trend bias to be up.
Key data to watch
Traders of the index will want to consider key catalysts for potential market volatility in the form of the finance minister’s National Budget Speech at 2pm on Wednesday (22 February) and US Federal Open Market Committee (FOMC) meeting minutes being released on the same day
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