Technical Tuesday

3 March 2015

Our weekly technical report is compiled by in-house market analyst Shaun Murison

In the report this week we look at the South Africa 40 index, key indicators as well as the following equities:

Omnia Holdings Ltd

Woolworths Holdings Ltd

Sappi Ltd

South Africa 40 index

Technical view

The South Africa 40 cash index managed to close above the all-time high at 47150 last week but failed to gain impetus in continuing the rally, but rather moved into a short-term consolidation. The new short-term range is considered between levels 46500 and 47410.

The Stochastic has started to move back out of overbought territory as we consolidate. A sideways price consolidation at this stage looks bullish as sellers have not been allowed to gain any traction. A range trading opportunity is considered with a long bias, favouring a retest of the 47410 resistance level.

Should an upside breakout occur the height of the range projected would consider a proportionate 910 point upside move. Should a downside breakout of support at 46500 occur trend followers would look to accumulate at the lower levels of support rather than trade against the longer -term uptrend.

Source: ProRealTime charts, as of 03/03/2015

Equities in focus

Omnia Holdings Ltd

The price of Omnia Holdings has broken out of a double bottom reversal pattern (blue “w”). The pattern suggests that the price has now reverted from a downtrend into a short-term uptrend.

A return to short-term resistance at 19220 is the initial target favoured, a break of which further favours a move to the target projected from the height of the pattern (dotted red lines) at 20650.

A price close below support at 17750 would consider the failure of the bullish reversal pattern. 

 

Source:  ProRealTime charts, as of  03/03/2015

Woolworths Holdings Ltd

The price of Woolworths has experienced its first pullback after reaching a new all-time high. The current pullback is the first significant retracement after the most recent break of the upper Bollinger Band.

The Bollinger breakouts, preceded by low volatility, show a strong directional commitment and the first pullbacks thereafter (to the middle Bollinger line or 20MA) often provide a second opportunity for entry in line with the original breakout.

The red arrow highlights an intraday bullish candlestick reversal at horizontal support and the 20MA (red line).  A move to retest the recent high at 9520 is favoured, while the price closing below trend-line support at 8600 would consider the failure of the bullish indications.

Source:  ProRealTime charts, as of  03/03/2015

Sappi Ltd

Sappi has entered into a range bound price environment with the support thereof considered at 4700 and resistance at 5150. The preceding move up was supported by a strong increase in volume (red arrows) while the current volume into the range consolidation (red rectangle) is low on a relative basis.

This alludes to the longer-term price momentum remaining bullish. With this in mind, the shorter-term range finds favour with a long bias and a move back towards resistance at 5150 is favoured. A price close below 4650 would consider the failure of the bullish considerations.

Source:  ProRealTime charts, as of  03/03/2015

Market overview

A Technical Analysis overview of key indicators and sectors with regards to trend, volatility and overbought/oversold conditions.

Click to view this week's market overview

 

 

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