South Africa 40 Cash Index price testing support after bearish indications
The index price has since conformed to bearish technical assumptions and is currently testing a break of the 68500-support level.
South Africa 40 Cash Index
The bearish indications highlighted in our previous note (below) confirmed on Tuesday’s price close. The price has since conformed to the bearish assumptions, trading through the initial support target at 68500.
The price is currently trading below the 68500 level. Should the price close below this level, a downside breakout would be confirmed, placing the 67400 level as the next downside support target.
Traders who have been short from the reversal, might consider trailing their respective stops closer, from a close above the 69760 level, to a close above the 68500 level.
Traders not already short into the move, might prefer to wait for the break of support at 68500 to confirm, before entering new positions into the index. In this scenario, the same support target and stop indication as above may be used by traders.
South Africa 40 Cash Index (Previous)
The South Africa 40 Cash Index has respected the 69760-resistance level and could be forming a bearish reversal from this point.
The bearish reversal would be confirmed should the price close below the midpoint of the preceding green candle. The recent move to resistance (shaded grey) also resembles a bear flag formation, another negative indication which would be confirmed on a close below shaded support.
Should the bearish indications confirm, 68500 becomes the initial downside support target, and a close below this level would suggest 67400 as a possible further target from the move. In this scenario traders might consider using a close above the 69760 resistance level as a stop loss indication.
Large cash adjustment expected
While considering exits, traders will want to note that the South Africa 40 Cash Index is expected to adjust for a dividend in the underlying, currently expected to be around 141.7 points. The adjustment will take place late Tuesday afternoon (5 September 2023).
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