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
1 April 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 Standard Bank Group
South Africa 40 Cash Index
The South Africa 40 Cash Index has muddled along since our last note although has now started to renew gains. Our guidance remains relatively unchanged in that the long term trend is up, and after a brief pullback from all-time high territory the index does look like its attempting to push higher in the short term. 84450 remains the initial upside resistance target, although traders might consider tightening their respective stop levels to a close below the 81850 level (80280 previously).
Large cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying of 301,8 points on Tuesday the 1st of April 2025.
USD/ZAR
The bearish price reversal highlighted in our previous note has failed with the price closing back above the 18.35 level. The 18.45 level is currently acting as resistance for the pair.
For new long positions traders might hope to see a close above the 18.45 level before targeting a move towards the 18.85 level. In this scenario, a close below the 18.35 level might be used as a stop loss consideration.
For new short positions, traders might prefer to see a price close below yesterday’s low. In this scenario, 17.90 becomes the downside support target, while a close above the 18.45 level might be used as a stop loss consideration.
Spot Gold
The price of gold has extended gains following the 'flag' (shaded blue) breakout. A flag pattern hints that the trend prevalent before its formation is likely to continue.
We now have the short-term momentum aligning with the long-term uptrend. A projected target from the pattern finds confluence with the 100% Fibonacci extension target at 3185.
Traders who have been long into the move might consider using a close below a one day low as a stop loss indication.
Brent Crude Oil
The price of brent crude has now traded through the 74.00 target suggested from our previous note. The close above this level suggests the 77.30 level to be a further target from the move. Traders who are long might consider using a close below the 73.50 level as a stop loss indication.
Firstrand Ltd vs Standard Bank Group
The pair considers a Long Firstrand position against a Short Standard Bank position. The net result of these combined trades looks for an 13% 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 / Standard Bank 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
Get full report
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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