South Africa 40 Cash Index update and cash adjustment reminder
After last week’s failed reversal at the 62030 level, we have seen some continued downside with the price of the South Africa 40 Cash Index moving towards a lower level of support at 58950.
We continue to consider the price trend for the South Africa 40 Cash Index to be sideways and in turn consider a range bound trading environment at present.
We have again seen a bullish price reversal, this time just above the 58950-support level. The bullish reversal is supported by a move out of oversold territory from the stochastic indicator. Our concern lies in the strong gain day of the reversal occurring while US markets were closed for the Labour Day holiday.
To confirm a move higher we would like to see today’s candle closing above the 61050-resistance level, following which 62030 becomes the initial upside target from the move. In this scenario, traders might consider using the midpoint of the long-bodied candle at around 60290 as a stop loss indication for the trade.
Should we not get the confirmation for the long trade, and instead the price continues to trade lower, we will be looking for a new bullish reversal at either the 58950 to 58000 range for long entry.
We are not looking to short the index while support lies in close proximity to the price.
Cash adjustment
Traders of the South Africa 40 Cash index will want to note that the index is set to adjust (on Tuesday the 6th of September) for a dividend in the underlying, currently estimated at 102.6 points.
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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