South Africa 40 Cash Index price forecast: bearish reversal at resistance
The bearish price reversal is accompanied by an overbought signal on the stochastic oscillator.
South Africa 40 Cash Index
The longer-term trend for the South Africa 40 Index remains sideways for the time being. This continues to suggest a range trading price environment for the index. As such, we continue to look for opportunities to trade between support and resistance levels within this broader sideways consolidation.
The South Africa 40 Index has now formed a bearish reversal off the 68515-resistance level. The bearish price reversal is accompanied by an overbought signal on the stochastic oscillator.
The reversal and overbought signal suggest a short-term decline to follow, with 66250 the initial support target. Traders who are short into the move might consider using a close above the reversal high and resistance at 68515 as a stop loss indication.
Key data
This evening (31 January 2024, 9pm) will see traders keeping an eye on the US Federal Reserve meeting. Expectations are for no change in lending rates, however commentary from Fed Officials will be closely monitored for clues to towards the pace of future monetary easing going forward.
South Africa 40 Cash Index (previous)
The South Africa 40 Index has now rallied to the previously guided resistance target at 68515. In doing so, the index has now moved into overbought territory.
Range traders who have been long from the reversal at support (circled green), might now look to be exiting their positions whilst waiting for the next opportunity to present itself.
No cash adjustment expected
The South Africa 40 Index is not expected to adjust for a dividend in the underlying this week.
Key Data points
Local trade balance data is perhaps the most relevant domestic news point for traders to watch out for this week. On the global front, we await the Bank of England’s (BOE) and Federal Reserve Bank’s rates announcements on Wednesday as well as US Non-Farm Employment data on Friday.
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.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
