SA40 in short-term consolidation

The SA40 index reached our initial target at 41250 but failed to continue a move towards channel resistance.

The blue circle on the chart below highlights a candle formation known as a Dark Cloud Cover which is often a precursor to a short-term bearish reversal in price.

The price of the SA40 has started to retrace but the decline now appears to be a short-term consolidation between levels 40550 and 41070.

The first candle after the pattern marks the high and low of the near-term consolidation and the small bodied candles that followed confirm the consolidation by remaining within the high and low of this range.

The long-term upward trend remains in place. Should a downside breakout occur, support at the levels between 39800 and 40015 could provide trend followers with an opportunity to buy the dip of the current uptrend.

Should an upside breakout occur, it would provide another opportunity to join the long-term uptrend favouring an initial target at 41500 (recent high), followed by the channel resistance level at 42400.

South Africa 40 index - 12 November

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.