Technical Tuesday
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The outlook for the South Africa 40 Cash Index, Gold, Oil and the Rand
Breakout, trend following and pair trading opportunities on local and international shares
Entry levels, target prices and failure levels
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Contact us: 010 500 8624
Call 010 500 8624 or email newaccounts.za@ig.com to talk about opening a trading account. We're around 24 hours a day from 9am Saturday to 11pm Friday.
Contact us: 010 500 8624
18 February 2025
In the report this week, we look at the following markets:
- South Africa 40 Cash Index
- USD/ZAR
- Spot Gold
- Brent Crude Oil
- Firstrand Ltd vs Nedbank Group
South Africa 40 Cash Index
The suggestion of exiting long positions on the South Africa 40 Cash Index around the all-time high in our previous note, appears to have been premature. The index has since produced an upside break of the previous high of 80075. The upside breakout now suggests that overhead trend line resistance at 84750 could be a longer term target for the South Africa 40 Cash Index.
The move reaffirms the uptrend for the index, suggesting that trend followers would again look to keep a long bias to trades.
For new positions we are now waiting for the first pullback from new high territory, preferably with the pullback ending with a bullish price reversal closer to one of the labelled support levels on our chart.
Should this scenario present itself we will update guidance accordingly with targets and failure levels.
No cash adjustment expected
The South Africa 40 Cash Index is not expected to adjust for a dividend in the underlying on Tuesday the18th of February 2025.
USD/ZAR
The USD/ZAR has tried to reverse of range support at 18.30 for a second time now. The reversal places resistance at 18.85 as the initial upside target. Traders who are long might consider using a close below support at 18.30 as a stop loss indication.
Spot Gold
Gold has now produced a short term consolidation around all-time highs (highlighted red). The long term trend is affirmed as up.
Traders respecting the long term trend might look to keep a long bias to positions on the commodity.
Long entry might be considered on a break above range resistance at 2940, before targeting a move towards the 3035 Fibonacci extension level. In this scenario, a close below the mid-point of the short term range might be used as a stop loss consideration.
Should the price of gold instead break support of the short term range at 2875, traders might prefer to wait out weakness before looking for long entry on a price reversal closer to one of the lower levels of support labelled on our chart.
Brent Crude Oil
The price of brent crude has now affirmed a short term range between levels 74.00 and 77.30. The price has now formed a bullish price reversal off range support at 74.00 and from oversold territory. The reversal suggests 77.30 to be a near term target. Traders who are long might consider using a close below 7400 as a stop loss indication.
Firstrand Ltd vs Nedbank Group
The pair considers a Long Firstrand position against a Short Nedbank position. The net result of these combined trades looks for an 5% profit margin. A stop loss is considered of equal proportion to the expected gain.
A successful pair trade can be realized 1 of 3 ways:
1. The long position rises while the short position falls
2. The long position rises faster than the short position rises
3. The short position falls faster than the long position falls.
The blue line on the chart represents the Firstrand / Nedbank ratio which recently traded more than 2 standard deviations below the mean (middle line). A successful trade would require the ratio (blue line) to return to the mean to meet the guided profit target.
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For the full report, which adds trade opportunities on local and international shares, click the link below
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For the full report, which adds trade opportunities on local and international shares, click the link below
Shaun Murison
Our weekly technical report is compiled by in-house senior market analyst, Shaun Murison.
Shaun has worked in financial markets for over ten years. As market analyst, he presents our CFD trading seminars around the country. In addition, Shaun is a regular commentator on the local financial markets, contributing to various media (such as CNBC Africa and Business Day) and writing daily and weekly market reports. He is a registered person at the JSE as well as a Certified Financial Technician (CFTE). You can follow Shaun on Twitter at @ShaunMurison_IG for regular market updates and insight.
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