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South Africa 40 Cash Index price forecast: bullish reversal off support

The South Africa 40 Cash Index has managed to produce a bullish price reversal off the 66250 level, as per our scenario in the previous note

Source: Bloomberg

South Africa 40 Cash Index

Source: IG charts
Source: IG charts

The South Africa 40 Cash Index has managed to produce a bullish price reversal off the 66250 level, as per our scenario in the previous note (below).

The bullish price reversal (circled red) is accompanied by a move out of oversold territory on the stochastic oscillator.

These indications suggest long trade setup with 68515 the initial resistance target from the move. A close below the reversal low or 66250 level might have been used as the initial stop loss, although new long positions from current as well as existing long positions might consider trailing their stop loss levels to a close below the one day low.

Key economic data for the week commencing 19 February

Date

Time

Region

Market Event

Forecast

20 February 2024

11:30am

ZAR

Unemployment rate

31.90%

21 February 2024

9:00pm

USD

FOMC Meeting Minutes

21 February 2024

10:00am

ZAR

CPI y/y

5.10%

21 February 2024

2:00pm

ZAR

National Budget Speech

22 February 2024

10:15am

EUR

French Flash Manufacturing PMI

43.1

22 February 2024

10:15am

EUR

French Flash Services PMI

45.4

22 February 2024

10:30am

EUR

German Flash Manufacturing PMI

45.5

22 February 2024

10:30am

EUR

German Flash Services PMI

47.7

22 February 2024

11:30am

GBP

Flash Manufacturing PMI

47

22 February 2024

11:30am

GBP

Flash Services PMI

54.3

22 February 2024

3:30pm

USD

Unemployment Claims

212K

22 February 2024

4:45pm

USD

Flash Manufacturing PMI

50.7

22 February 2024

4:45pm

USD

Flash Services PMI

52.5

South Africa 40 Cash Index (previous)

Source: IG charts
Source: IG charts

The South Africa 40 Cash Index continues to consolidate between levels 66250 (support) and 68515 (resistance). The price is drifting to the support of this range, although now trades within oversold territory.

Our guidance remains unchanged from our previous note in that:

  • For long entry we are looking for either a bullish reversal closer to the 66250 or 65040 support level.
  • For short entry we are looking for a bearish reversal of the 68515-resistance level.

Should one of the above scenarios or more favourable setup manifest we will update accordingly with targets and failure levels.

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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