South Africa 40 Cash Index price forecast: short term range in play

South Africa 40 Cash Index

The price of the index continues to trade in a short-term range. The range is considered between levels 68970 (support) and 69920 (resistance) (revised from 69760 previously).

The longer-term trend for the index remains sideways and still suggests a range trading environment in which long or shorts may be considered depending on circumstance.

For long entry traders might look for a break of the 69920 level to confirm with a close above, before targeting a move towards 71125, whilst using a close below 68970 as a stop loss indication. The overbought signal does however caution this scenario. We did technically have a break of the previously guided range resistance of 69760, although the close above was marginally higher and appeared to lack momentum. This in turn has prompted a revision of the short-term range resistance.

Traders looking for new short positions, might prefer to see a price close below the 68970 level to show some momentum to a move out of overbought territory. In this scenario, a close above 69920 might be used as a stop loss indication, while targeting a move towards the 67580-support level.

Cash adjustment expected

Traders will note that the South Africa 40 Cash Index is expected to adjust for a dividend in the underlying estimated at 65.1 points on Tuesday the 5th of December 2023.

South Africa 40 Cash Index (previous)

The negative divergence signal on the South Africa 40 Cash Index highlighted in the previous note has failed in predicting short term decline. Traders who were short on the signal might have been stopped out, while traders waiting for the close below 67580 for short confirmation would not have entered the trade.

The price of the index is now finding resistance at the 69760 level and continues to trade in overbought territory.

The longer-term trend for the index remains sideways and still suggests a range trading environment in which long or shorts may be considered depending on circumstance.

For long entry traders might look for a break of the 69760 level to confirm with a close above, before targeting a move towards 71125, whilst using a close below 68970 as a stop loss indication. The overbought signal does however caution this scenario.

Traders looking for new short positions, might prefer to see a price close below the 68970 level to show some momentum to the bearish reversal currently forming off the 69760 level. In this scenario, a close above 69760 might be used as a stop loss indication, while targeting a move towards the 67580-support level.

Cash adjustment expected

Traders will note that the South Africa 40 Cash Index is expected to adjust for a dividend in the underlying estimated at 23 points on Tuesday the 28th of November 2023.