South Africa 40 Cash Index price trading lower ahead of central bank activity

South Africa 40 Cash Index

The short criteria highlighted in our previous note came to fruition resulting in the South Africa 40 Cash Index trading directly to the 67400-support target. Part of the move would however have been attributed to the large cash adjustment from the dividend in the underlying (330.8 points).

The price has since rebounded, although could be forming a new bearish price reversal ahead of what is a news heavy week.

A close below 68500 would confirm the reversal, placing 67400 as the initial support target once again. In this scenario, a close above 68900 might be used as a stop loss consideration.

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 176.9 points. The adjustment will take place late Tuesday afternoon (19 September 2023).

High impact data expected

Traders will also take note of high impact data scheduled this week which could have a material effect on global index movements, including the South Africa 40 Cash Index. Amongst these key data points are Wednesdays US Federal Reserve, Thursday’s Bank of England’s, and the South African Reserve Bank’s rate decisions.

South Africa 40 Cash Index (Previous)

After reaching the lower support target (67400) suggested by the bearish flag and reversal off resistance, the South Africa 40 Cash Index has rebounded from oversold territory to find resistance on the 68500 level.

Short setup considerations

At the time of writing the price is now reversing off the 68500 level. A bearish reversal would be confirmed should today’s (12 September 2023) price close below the halfway mark of the preceding green candle. In this scenario 67400 becomes the initial support target while traders might use a close above 68500 as a stop loss indication.

Long setup considerations

Traders looking for long entry, might instead hope to see a close above the 68500-resistance level before targeting a move towards the 69760-resistance level. In this scenario, a close below the 68000 level might be used as a stop loss consideration for the trade.

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 330.8 points. The adjustment will take place late Tuesday afternoon (12 September 2023).

High impact data expected

Traders will also take note of high impact data scheduled this week which could have a material effect on global index movements, including the South Africa 40 Cash Index. Amongst these key data points are Wednesdays US CPI inflation data, as well as Thursday’s European Central Bank’s (ECB) rate decision.