South Africa 40 Cash Index price forecast: bullish reversal off support confirmed
Traders might target a move to initial resistance at 65100, while using a close below the 63400 level as a stop loss indication.
South Africa 40 Cash Index
The South Africa 40 Cash Index did not give the bullish confirmation we were hoping for in our last note, but instead drifted lower to the next level of support at 63400.
We have however seen a bullish price reversal (circled red) off this level, supported by an oversold signal. The long green candle suggests some momentum to the move. Traders might target a move to initial resistance at 65100,while using a close below the 63400 level as a stop loss indication for the trade. For more meaningful gains we would like to see a close above the 65100 to potentially unlock a further move towards the 66450 level.
No cash adjustment expected
Traders will note that the South Africa 40 Cash Index is not expected to adjust for a dividend in the underlying this week (Tuesday 31st of October).
Key data
Trades will want to note key data in the form of Wednesday evenings Federal Reserve, and Thursday afternoon’s Bank of England policy meetings, which could impact short term market direction.
South Africa 40 Cash Index (Previous)
The South Africa 40 Cash Index’s downside break of the 66450 level, saw a prompt move to support at 65100. This level has now been broken as well but moved the index into oversold territory.
Marked with the black arrow we do see an intraday price reversal (hammer) from oversold conditions. This does suggest that a bullish reversal could be forming. Confirmation of the reversal would be considered on a positive close above the 65100-resistance level. In this scenario, a close below the low at 63910 might be used as a stop loss consideration, while searching for a retest of the 66450-resistance level.
Should the bullish reversal not confirm and instead we see a lower close on the index price today, 63400 becomes the downside support target from the move. Our preference in this scenario would be to wait out weakness and see how the index price handles the 63400-support level. A break of this level would require a reassessment of the longer-term trend (currently considered sideways).
No cash adjustment expected
Traders will note that the South Africa 40 Cash Index is not expected to adjust for a dividend in the underlying this week (Tuesday 24th of October).
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