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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

South Africa 40 Cash Index waiting on the next directional cue

Source: Bloomberg
Source: IG Charts
Source: IG Charts

After failing to reach the high at 65600, the price of the South Africa 40 Cash Index has traded through our trailed stop level as it undergoes a short term correction from its recent rally. Traders who were long into the previous rally would have also received a cash adjustment in lieu of a dividend in the underlying of around 245 points.

The short term correction looks to have stalled temporarily at the low of 62030 as the index nears oversold territory.

For a downside continuation of the correction, a close below 62030 would suggest a move towards the next support target of 61050.

For renewed gains, we are looking for a close above 63200 to target a move back towards the 63900 and 64750 levels respectively.

Our preference right now is to wait for the break in either direction before opening new positions on the index.

Should either scenario manifest we will update our guidance with revised targets and stop loss suggestions.

Cash adjustment

Traders of the South Africa 40 Cash index will want to note that the index is set to adjust (on Tuesday the 23rd of August) for a dividend in the underlying, currently estimated at 38.6 points.

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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