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The SA40 index has traded through our initial resistance target at 40015 and is now continuing towards our favoured target at 40700, as the price moves into new high territory.
The short, medium and long-term trends remain intact at this stage but we are however moving significantly into overbought territory as per our Stochastic indicator at the bottom of the chart.
Overbought signals in an uptrend serve as a warning that the current upwards move might becoming a bit overheated in the near-term rather than a signal to trade against the prevailing trend.
Should a pullback occur, the previous closing and intraday highs at 39800 and 40015 could provide opportunity for trend followers to participate in the uptrend, while a break of these levels would consider 39000 as the next level of support.