Technical Tuesday

17 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:

Discovery Ltd

BHP Billiton Plc (SA)

Woolworths Holdings Ltd

South Africa 40 index

Technical view

The South Africa 40 cash index broke the 46500 support last week and traded through the 45925 level. The price has since rebounded to find resistance on what was previous support at 46500. The 45925 level has now been removed as it appears to have lost its relevance.

The price activity highlighted in red looks ambiguous as it may be a bullish reversal or consolidation (between levels 45550 and 46500). As the underlying trend (long-term) remains bullish, while the Stochastic has started to move back out of oversold territory, a long bias remains favoured in either scenario.

Breakout traders could wait for a close above resistance at 46500 before anticipating a retest of the 47410 level. Range traders might look to accumulate near support at 45550 (should weakness occur) anticipating a move back to the 46500 level, with a close below 45100 as a possible failure level.

Source: ProRealTime charts, as of 17/03/2015

Equities in focus

Discovery Ltd

The price of Discovery is experiencing short-term weakness following corporate activity in the form of a dividend adjustment and rights issue activity. The long-term uptrend remains intact, and the relative strength comparison indicator shows how the share price is in a trend of outperformance against the Top40 index.

Short-term support levels are considered between 12060 and 11400 and should the price retrace towards these levels, trend followers might find opportunity to accumulate long with the initial upside target considered at the recent high (13477).

Source:  ProRealTime charts, as of  17/03/2015

BHP Billiton Plc (SA)

The price of BHP Billiton has formed a bullish candlestick reversal pattern (circled red) off support at 25550 while the Stochastic has crossed its trigger line in oversold territory.

The indications allude to the end to the short-term decline from this year’s highs and a possible rebound to follow. Gap resistance at 27700 is the favourite upside target in the short-term, while a close below support at 25550 would consider the failure of the bullish indications.

Source:  ProRealTime charts, as of  17/03/2015

Woolworths Holdings Ltd

Woolworths looks to have started a bullish reversal after the pullback from its all-time high. The Stochastic has crossed its trigger line in oversold territory whilst showing a positive divergence with the price (dotted black lines).

These indications are considered bullish and a move towards resistance at 9140 is favoured in the near-term. Should this level be breached the recent high around 9500 is the next anticipated price target. A price close below 8340 would consider the failure of the bullish indications.

Source:  ProRealTime charts, as of  17/03/2015

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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