South Africa 40 Cash Index price forecast: A long and short scenario
The rangebound price environment on the South Africa 40 Cash Index continues to suggest long or short positions are permissible
South Africa 40 Cash Index
The movements on the local index have been diverging somewhat from that of its international peers (US and Europe in particular), as resource counters and a number of heavyweight industrial counters (i.e. Naspers & Prosus) have limited gains on the JSE Top 40 benchmark.
However, a fresh look at the South Africa 40 Cash Index in the new year (2024) tells a similar story that of the past year (2023), which is that the index remains in a broad rangebound trading environment.
The rangebound price environment on the South Africa 40 Cash Index continues to suggest long or short positions are permissible in the absence of an up or down long-term trend bias.
Previously guided levels (from 2023) on the SA40 Cash Index have been adjusted and simplified to renew the relevance of support and resistance considerations for the local benchmark.
The price of the index is currently moving to test support at the 66250 level, whilst trading in oversold territory.
Long trade entry and risk scenario
Traders looking for long entry might prefer to see a bullish candlestick / price reversal before the 66250 level, accompanied by a move out of oversold territory. In this scenario, a close below the 66250 level may be used as a stop loss consideration, whilst targeting a move back towards resistance at 68515.
Short trade entry and risk scenario
Should the price not manage to form a bullish reversal before the 66250 level and instead move to close below, a downside breakout would be considered with 65040 the next support target. In this scenario, traders may be hard placed to find short entry as the index lies deep within oversold territory already. However those choosing to find short entry into such a move might consider using a close above a one or two day high as aa stop loss indication.
Cash adjustment expected
Traders will note that the South Africa 40 Cash Index is not expected to adjust for a dividend in the underlying in the week commencing 15 January 2024.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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