Technical Tuesdays

18 March 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:

Anglo American Platinum Ltd

Sasol Ltd

Shoprite Holdings Ltd

View market data

Company data

Dividends

Economic catalysts

South Africa 40 index

Technical view

The South Africa 40 index broke below the support of last week’s range and has now returned back to retest the level (42200).

The short-term trend is now considered down, while the long-term trend remains up (price continues to trade firmly above 200MA). Should the price close above 42200 (previous support and current resistance) as well as above our dotted trend line labelled 1, a move towards 43100 is favoured.

Should the price find resistance at 42200 by failing to close above this level, 41400 (recent low) becomes the favoured near-term target, a break of which sees the next support level from our dotted trend line labelled 2 favoured at 41000. Due to our long-term trend remaining up, trend followers would look to the first scenario for a possible long entry, or wait for an opportunity for a long entry should the short-term weakness ensue as with the second scenario.

The dotted trend lines also highlight what could (not confirmed) be a falling wedge pattern, which we will monitor over the coming weeks should it become relevant.

 

Source: ProRealTime charts, as of 18/03/2014

Equity in focus

Anglo American Platinum Ltd

The price of Anglo Platinum has broken out of a triangle consolidation. The preceding uptrend appears to be resuming once again.

The height of the triangle pattern, projected from the breakout area (dotted red lines), arrives at a target at 50700. More conservative breakout traders would wait for the price to retrace back towards the breakout level at 45700 for a possible entry.

Waiting for the price to retrace after the initial breakout for a point of entry, reduces the expected risk relative to the anticipated reward. The price trading below the support trend line at 44500 would deem the bullish indications to have failed.

Source: ProRealTime charts, as of 18/03/2014

Sasol Ltd

The price of Sasol has broken out of a triangle consolidation, and retested the breakout area.

The preceding uptrend appears to be resuming once again. The height of the triangle pattern, projected from the breakout area (dotted red lines), arrives at a target at 60300.

The price trading below the support trend line at 55300 would deem the bullish indications to have failed.

Source: ProRealTime charts, as of 18/03/2014

Shoprite Holdings Ltd

The price of Shoprite has broken out of an inverse head and shoulders formation.

This formation is considered a reversal pattern, as it warns of the preceding downtrend reversing into a new uptrend. The height from the head (H) to the neckline line at 14800, projected from the neckline, arrives at a near-term target of 16000.

The price closing below the right shoulder (R) at 14250 would render the above indications to have failed.

Source: ProRealTime charts, as of 18/03/2014

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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