South Africa 40 Cash Index price reversal forming in line with longer term trend
The SA40 Cash Index is forming a bullish price reversal, although IG sentiment suggests retail traders are not yet convinced.
South Africa 40 Cash Index
The South Africa 40 Cash Index broke support (72840) of the short-term range over the last week and proceeded to test channel support thereafter.
The longer-term trend is still considered up while the price trades firmly above the 200-day simple moving average (200MA) (blue line), although we are seeing a near term correction thereof.
The index is now moving out of oversold territory.
We continue to look for a new long entry opportunity in line with the longer term up trend considered.
In our previous guidance (Technical Tuesday) we were looking for the following:
‘Long entry would be considered now on either a bullish price reversal off the 69240 level or a strong price close above the short black trend line on our chart, ideally coupled with a move out of oversold territory. In either of these situations 72840 and 75250 become the upside resistance targets, while a close below channel support might be used as a trailing stop loss indication for the trade. ‘
We are now testing the long trade scenario, whereby the price is breaking the downward trend line resistance and testing the 72840 level. It is early in today’s session (at the time of writing), but should we get the close above 72840 our long criteria will be met, presenting the 75250 as the next upside resistance target, while a close below the reversal low at 70700 might present a stop loss consideration for the trade.
South Africa 40 Cash Index - IG client sentiment
As of the 1st of March 2023, IG clients do appear to be positioned in a contrarian fashion to the technical assumptions on the daily graph, with 71% of IG traders expecting the price to fall in the near term. 29% of IG clients expect the price to rise in the near term.
Key data to watch this week
Key economic data scheduled for the week which is likely to influence global markets and in turn the South Africa 40 Cash Index is as follows:
- 1 March, ISM Manufacturing Purchasing Managers Index (PMI) data out of the US (est. 47.9 previous 47.4)
- 2 March, Weekly Unemployment Claims data out of the US (est. 196000, previous 192000)
- 2 March, Federal Open Market Committee (FOMC) member Waller speaks
- 3 March, ISM Services PMI data out of the US (est. 54.4, previous 55.2)
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