Technical Tuesdays

9 December 2014

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:

USD/ZAR

EUR/ZAR

Capitec Bank Holdings Ltd

View market data

Company data

Dividends

Economic catalysts

South Africa 40 index

Technical view

Last week’s rebound on the South Africa 40 cash index lost its momentum, and the price instead consolidated around the key level of 43750. The green and red arrows show how the price has been closing above and below the level and previously non-committal to a direction.

Today’s price action marked with the black arrow does however show directional commitment, to the downside. The 43750 level is now considered a possible resistance level, while the recent low at 42340 becomes the anticipated (and favoured) support target.

Should this support level break, the next levels of support are considered at 41370 and 40850. For the short-term bias to reverse to bullish we would need the price to start trading above our key level (43750) once again.

Source: ProRealTime charts, as of 9/12/2014

Currencies to watch

USD/ZAR

The USD/ZAR has broken out of a triangle consolidation pattern which suggests the continuation of the preceding trend of the rand weakening against the dollar.

The price is however pulling back today and pattern traders may consider long entry should the price retest the breakout area at R11.28.

The height of the pattern projected (dotted black lines) considers an upside target of R11.95, while the price close below R11.10 would consider the failure of the bullish technical pattern.

Source: ProRealTime charts, as of  9/12/2014

EUR/ZAR

The EUR/ZAR has broken out of a double bottom (blue “W”) and falling wedge (red coloured) formation. These patterns are considered bullish reversal patterns in the current context and favour a continued short-term rebound.

A price pullback towards trend line and horizontal support at R14.05 could afford long entry for traders of these types of formations. The initial target from the wedge resistance is considered at R14.38, which if broken considers the projected target from the double bottom formation at R14.55.

A price close back within the wedge formation below R13.75 would allude to the failure of the bullish formations considered. 

Source: ProRealTime charts, as of  9/12/2014

Equities to watch

Capitec Bank Holdings Ltd 

The price of Capitec has retraced from its recent high in a wedge styled formation (black lines). This pattern highlights a slow grind down after a strong move up alluding to the momentum remaining bullish for the share price. Circled in red is a bullish engulfing candle pattern which considers a bullish reversal from the pullback in price. 

The reversal has occurred off horizontal support. These considerations favour renewed gains with the recent high at 31650 the initial target. A price close below 28800 would allude to the failure of the bullish indications.

Source: ProRealTime charts, as of  9/12/2014

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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