Technical Tuesday

12 May 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:

Mediclinic International Ltd

MTN Group Ltd

JSE Ltd

South Africa 40 index

Technical view

The pullback from the all-time high extended over the last week to trade through support at 47410 before forming a bullish engulfing candlestick reversal (circled blue). The pattern implies the end of the decline and possible rebound to follow.

The rebound, after initially breaking resistance at 47980, has now stagnated at this level leaving the consideration that this is a pivotal level in terms of determining the short-term trend bias.

Above this level the short-term target favoured is 48810, below this level a retest of support at 47980 is favoured. Below this pivotal level, short trade considerations are still not a preference as the longer-term uptrend remains in play.

The ambiguous nature of the chart suggests erring on the side of caution being a more favourable position rather than committing to an unconfirmed directional bias.

Source: ProRealTime charts, as of 12/05/2015

Equities in focus

Mediclinic International Ltd

Mediclinic has formed a bullish harami candlestick reversal (circled blue). This pattern suggests the end of the short-term retracement and a possible rebound to follow. The Stochastic is crossing out of oversold territory supporting the price reversal.

High volume at the reversal point suggests significant accumulation of the share. These are bullish indications and short-term upside is favoured with the initial resistance target located at 12865, a break of which would further favour a move to the all-time high at 13465.

Should the price fail to rebound and close below support at 11350, the bullish indications would be considered to have failed.

Source: ProRealTime charts, as of 12/05/2015

MTN Group Ltd

MTN Group’s share price has experienced its first pullback since breaking out of the range (between levels 22400 and 23070) as well as the upper bollinger band (red square). A break of the upper bollinger band highlights significant force in the initial move up and when compared with the cumbersome move down (eight trading days to erase 2 days’ worth of gains) suggests that the momentum remains with the bulls.

The price looks to have found support and a retest of resistance at 23965 is favoured in the short-term, which if broken sees the short-term high at 25000 the next resistance target. Should support not hold and the price close below 22400 the bullish momentum would be deemed to have failed.

Source:  ProRealTime charts, as of  12/05/2015

JSE Ltd

The price of JSE Ltd is breaking out of a bullish flag formation (red parallel lines). This pattern highlights the resumption of an uptrend after a brief pullback in the share price.

The stochastic oscillator has moved out of oversold territory and is displaying a positive divergence with the share price. These are also bullish considerations supporting the share price movements.

The bullish flag formation projects a proportionate upside target at 14375, while a close below support at 12630 would indicate a failure of the short-term bullish indications.

Source:  ProRealTime charts, as of  12/04/2015

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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