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SA40 cash index

SA40 hits new low new lower low, but has recently also made a significant higher highs.

Shaun Murison ShaunMurison_IG
Senior Market Analyst, Johannesburg

Publication date : 2017-12-04T13:24:52+0000

Circled blue we see the candle which triggered both our stop loss at 53350 and significant low at 52915
We now have an interesting setup in that we have a new lower low, but have recently also made a significant higher high
This is testament to no clear direction at present and a broadening range formation / consolidation (price activity within the black lines)
A broadening formation in the below context is suggestive of a topping formation and alludes to further downside
However we are not yet convinced of this and these patterns are extremely difficult to trade
For now we adopt a neutral positioning and a wait and see approach before committing to either direction, which we will update in due course

SA40 cash index 28 November

- The index has reached a short term high of 55222, marginally short of the upside flag target (55350) before forming a bearish engulfing pattern in overbought territory

- A pullback has commenced since, which has taken the shape of a wedge/flag type formation once again

-This would be considered a bullish continuation pattern in current form

- Aggressive traders might find a new long entry from current, while more conservative traders might prefer waiting for a break above the wedge resistance and 53980 level for confirmation before finding a new long entry

- A stop is considered should the price close below the 53350 level

- This stop level is very tight due to the extent of the recent rally i.e. we are happy to give away a small loss in the search for a bigger gain in the current scenario

- 55222 is the initial target favoured

- 55350 remains a further upside target

- 52915 is a major low and key level for the health of the current uptrend in focus

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This information has been prepared by IG, a trading name of IG Markets Limited 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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