South Africa 40 Cash Index testing 200MA resistance
The South Africa 40 Cash Index has rebounded to test a confluence of resistance.
The South Africa 40 Cash Index break below the 69835-support level last week, failed to yield further decline, with the price now having returned above the level.
The transitioning of a longer-term trend, as is assumed currently (from up to sideways in this case), provides a difficult trading phase for the index.
Currently we see the index price testing a confluence of the 200-day simple moving average (200MA0 (blue line) and horizontal resistance at around the 71125 level.
For short entry, traders might want to see resistance hold with a negative close on today’s candle which is significantly below the previous day’s low. In this scenario, the recent low at 68500 would become the initial support target, while a close above the 71125-resistance level might be used as a stop loss consideration for the trade.
Should a reversal not confirm and instead a break of resistance (confirmed with a close) at 71125 occur, 72370 would become the initial resistance target from the move.
However, traders might prefer not to look for long entry into the upside breakout scenario in lieu of the close resistance target proximity, and perhaps unfavourable risk level assumption for the trade.
Cash adjustment
There is currently no dividend adjustment expected in the underlying index this week.
Client Sentiment
The majority of IG clients (52%) with open positions on the South Africa 40 Cash index currently expect the price to fall, while 48% of IG clients with open positions expect the price to rise. The client sentiment snapshot is as of the 4th of July 2023 at 2pm (GMT +2)
Top JSE movers this week (starting 3 July 2023)
Gains on the index this week so far have been supported by positive moves within the financial sector, with Investec, Remgro Reinet and Sanlam leading the gainers list at present.
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