South Africa 40 Cash Index price action affirms uptrend
Trend followers might prefer to enter on the first pullback from overbought territory.
South Africa 40 Cash Index
The South Africa 40 Cash Index’s upside break above the 70850 level has gained momentum and is moving towards the next resistance target at 73250. This move higher now suggests that we are moving out of a rangebound price environment and into a new uptrend.
The index continues to trade deep within overbought territory. Trend followers might now prefer to keep a long bias to trades, although waiting for the first pullback from this move higher and from overbought territory might be preferable for long entry.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying. The adjustment is currently estimated at 40.2 points and set for the 14th of May 2024.
Key data to watch
Date |
Time |
Region |
Event |
Previous |
14 May 2024 |
4:00pm |
USD |
Fed Chair Powell Speaks |
|
15 May 2024 |
1:00pm |
ZAR |
Retail Sales m/m |
|
15 May 2024 |
1:00pm |
ZAR |
Retail Sales y/y |
-0.8% |
15 May 2024 |
2:30pm |
USD |
Core CPI m/m |
0.4% |
15 May 2024 |
2:30pm |
USD |
Core Retail Sales m/m |
1.1% |
15 May 2024 |
2:30pm |
USD |
CPI m/m |
0.4% |
15 May 2024 |
2:30pm |
USD |
CPI y/y |
3.5% |
15 May 2024 |
2:30pm |
USD |
Empire State Manufacturing Index |
-14.3 |
15 May 2024 |
2:30pm |
USD |
Retail Sales m/m |
0.7% |
16 May 2024 |
1:00pm |
ZAR |
Building Permits y/y |
-17.6% |
16 May 2024 |
2:30pm |
USD |
Unemployment Claims |
|
17 May 2024 |
4:00am |
CNY |
Industrial Production y/y |
4.5% |
17 May 2024 |
Tentative |
USD |
Treasury Currency Report |
|
South Africa 40 Cash Index (previous)
Technically we have now seen a break (close) above range resistance at 70850, however the small-bodied candle (6 May), with a long upper wick, suggests a weak conviction to the move. This low conviction breakout suggestion is furthered by today’s candle, which is drifting back below the 70850 level.
A bearish price reversal would confirm if the close of today’s candle is lower than the low of the preceding candle. In this scenario, 69700 becomes the initial downside support target, while a close above the previous high at 71370 might be used as a stop loss indication.
Should the bearish price reversal fail to confirm, and instead we see a strong move higher in coming days, traders might then prefer to wait for the first pullback from this move for long entry. Should this scenario instead manifest, we will update guidance accordingly with targets and failure levels.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying. The adjustment is currently estimated at 54 points and set for the 7th of May 2024.
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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