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
21 January 2025
In the report this week, we look at the following markets:
- South Africa 40 Cash Index
- USD/ZAR
- Spot Gold
- Brent Crude Oil
- Truworths Ltd vs The Foschini Group
South Africa 40 Cash Index
After a bullish price reversal from oversold territory, the South Africa 40 Cash Index has rallied back above the 200-day simple moving average (blue line) (200MA) and the 75760-resistance level. The move has put the index back into overbought territory.
The move above the 200MA, after the recent move below this indicator, confirms our perspective that the index has moved into a broad range bound trading environment. As such we continue to look for trading opportunities in either direction between key levels of this broad range.
For new long positions traders might look for a break above the 76640 level, before targeting a move towards initial resistance at 78775. In this scenario, a close below the 75760 level might be used as a stop loss consideration.
For new short positions, traders might instead look for a bearish price reversal from overbought territory confirmed with a close below the 75760 level. In this scenario, 73715 becomes the initial support target from the move, while a close above the 76640 level might be used as a stop loss consideration.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying of 19,5 points on Tuesday the 21st of January 2025.
USD/ZAR
The USD/ZAR has continued to correct over the last week finding support at the 18.30 support level. The price attempting to reverse off this level. A bullish price reversal would be considered if we can see today’s green candle close above the halfway mark of the preceding red candle. In this scenario, 18.85 becomes the initial resistance target while a close below the 18.30 level would consider the reversal to have failed.
The long term trend for the index remains up, as such our preference remains keeping a long bias to trades on the currency pair.
Spot Gold
The long term trend for gold is considered up, although in the short to medium term the price trades in a rangebound fashion between levels 2600 and 2720.
The price is now testing resistance of this range at 2720. A close above this level would consider an upside break with 2790 the initial resistance target. In this scenario, a close below the 2690 level might be used as a stop loss consideration.
Brent Crude Oil
The price of brent crude oil has started to form a bearish price reversal off the 81.50 resistance level and from overbought territory. The reversal looks to have confirmed with a close below the 79.30 level. Traders who are short might look to target a move towards the 77.30 support level, while using a close above the 81.50 level as a stop loss consideration.
Truworths Ltd vs The Foschini Group
The pair considers a Long Truworths position against a Short Foschini position. The net result of these combined trades looks for a 12% 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 Truworths / Foschini 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.
Get full report
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.
Latest news
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2025-01-21T09:20:56+0000
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