Technical Tuesday

8 September 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:

FTSE 100

Wall Street

Germany 30

South Africa 40 index

Technical view

The South Africa 40 cash index bearish reversal (circled red) highlighted last week, resulted in a decline to 42680, although the downside target at 42030 was not realised. Instead the price has since rebounded and looks to be trading within a rising channel marked on the chart.

Due to its slow cumbersome rising nature, the channel is considered a consolidation rather than a renewed uptrend (at this stage). The index has reversed of the support of this channel and looks to be targeting resistance of the short-term high at 44835.

A break of this resistance would favour a move to channel resistance at 45700. A close below the low at 43100 would consider the failure of the suggested upswing and in turn see the downside target at 42030 favoured once again.

Click here to view South Africa 40 chart

Global indices in focus

FTSE 100

The FTSE 100 has entered into a consolidation phase following the recent decline we have seen since the beginning of August 2015. The consolidation has taken the form of a triangle pattern, and highlights a pause in movement as the security awaits the next directional catalyst.

The triangle formations are considered continuation patterns as they have a habit of forming before the trend, which preceded the formation, is resumed. The 20, 50 and 200 day simple moving averages on the chart (labelled 20MA, 50MA and 200MA) highlight the short, medium and long-term trends as currently down on the index.

However, it is prudent to wait for the breakout rather than pre-empting the move. The upside breakout level is considered with a close above 6235, while the downside breakout level is considered with a close below 6040. The height of the pattern (360pts) considers a proportionate move in the direction of the breakout when one does finally occur.

Click here to view the FTSE 100 chart

Wall Street

The Wall Street cash index has entered into a consolidation phase following the recent decline we have seen since the beginning of August 2015. The consolidation has taken the form of a triangle pattern and highlights a pause in movement as the security awaits the next directional catalyst.

Triangle formations are considered continuation patterns as they have a habit of forming before the trend, which preceded the formation, is resumed. The 20, 50 and 200 day simple moving averages on the chart (labelled 20MA, 50MA and 200MA) highlight the short, medium and long-term trends as currently down on the index.

However, it is prudent to wait for the breakout rather than pre-empting the move. The upside breakout level is considered with a close above 16480, while the downside breakout level is considered with a close below 16040. The height of the pattern (940pts) considers a proportionate move in the direction of the breakout when one does finally occur.

Click here to view the Wall Street chart

Germany 30

The Germany 30 index has entered into a consolidation phase following the recent decline we have seen since the beginning of August 2015. The consolidation has taken the form of an ascending triangle pattern and highlights a pause in movement as the security awaits the next directional catalyst.

Triangle formations are generally considered continuation patterns as they have a habit of forming before the trend, which preceded the formation, is resumed. However, an ascending triangle is considered to have an improved probability of breaking to the upside, which in the current scenario would be a trend reversal. It is however prudent to wait for the breakout rather than pre-empting the move.

The upside breakout level is considered with a close above 10390, while the downside breakout level is considered with a close below 10010. The height of the pattern (650pts) considers a proportionate move in the direction of the breakout when one does finally occur.

Click here to view the Germany 30 chart

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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IG provides an execution-only service. The material on this website does not contain (and should not be construed as containing) investment advice or an investment recommendation, or 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 the above information. Consequently any person acting on it does so entirely at his or her own risk. The research 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. This communication must not be reproduced or further distributed. The price levels provided are derived from ProRealtime Charts (IT-Finance)

South Africa 40 chart

Source: ProRealTime charts, as of 08/09/2015

FTSE 100

Source: ProRealTime charts, as of 08/09/2015

Wall Street

Source: ProRealTime charts, as of 08/09/2015

Germany 30

Source: ProRealTime charts, as of 08/09/2015

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