South Africa 40 Cash Index price tests range resistance
Traders will be looking for either an upside break or bearish reversal off the 68515 level
South Africa 40 Cash Index
The South Africa 40 Cash Index has now rallied to outer range resistance at 68515.
The price is testing this level and as per previous guidance, we are now looking for either an upside break or bearish reversal off this level.
A short trade scenario might be considered on a bearish price reversal off this level with a close below the 67940-level confirming the downside momentum. Ideally traders might like to see a reversal accompanied by a move back out of overbought territory. In this scenario, 66700 provides conservative downside target, while a close above the reversal high might be used as a failure indication.
For a long entry consideration, traders might prefer to see a strong close above the 68515-resistance level. In this scenario a move towards 70550 is favoured, while a close below the 67940 level might be used as a failure indication.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying before market close on Tuesday the 2nd of April for an estimated 125.8 points.
South Africa 40 Cash Index (previous)
While having reached our initial downside support target of 655570, the South Africa 40 Cash Index has failed to extend losses and test the next target of 655040.
Circled red we have a bullish price reversal off the 65570 level. The price has since started to move back towards range resistance at 67940.
Recent price reversals confirm 65570 (support) and 67940 (resistance) as the relevant trading range for the index at present.
When a rangebound price environment is prevalent, as is the case on the South Africa 40 Cash Index right now, our preference is to look to trade between the levels of the range or wait for a breakout of the range.
New short positions might be considered on a bearish price reversal around either the 67940 or 68515 resistance levels.
New long positions might be preferred should a bearish price reversal not confirm, and instead we see a bullish break of the 68515-resistance level.
Should one of these trading scenarios present themselves we will update guidance 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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