The South Africa 40 cash index has traded back to the initial support target at 45850 over the last week, but failed to extend the weakness and arrive at the lower support target from the wedge formation at 45050.
Following the bullish reversal (circled blue) which has brought the price back above the 45850 level, the wedge pattern is no longer deemed relevant and has therefore been removed from the chart. The 20 and 50 day simple moving averages (20MA and 50MA) highlight the current churning nature of the SA40 index as the price whipsaws back and forth through these indicators.
This confirms the short and medium-term consolidation the SA40 index is currently in. With the lack of commitment to a direction, especially in the near-term, while the price trades more or less in the centre of the broader consolidation between 45050 and 47160, we await a confirmation for a new directional bias.
Aggressive traders may look to trade within the horizontal levels of support and resistance, much like a pivot point trading methodology i.e. using a break of 46500 to target a move towards 47160 or waiting for a downside break of 45850 to target a move towards 45050.
However the lack of directional intent in the near-term would find favour with using the ultimate levels of support and resistance of the broader range (45050 and 47160) instead for either a breakout and new directional commitment or reversals off these levels for a range trading opportunity.