Technical Tuesday

18 August 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:

Investec Limited

Brait Se Limited

Discovery Limited

South Africa 40 index

Technical view

After falling just short of the 47540 resistance target, the South Africa 40 cash index has fallen back to support at 45180. The index now looks to have moved into a short term consolidation (highlighted by the red square).

The long tails on the candles marked with green arrows show the price being rejected below the 45180 level, with the index has been bought back on three different occasions to close above the level once again. With this in mind, the downside breakout level has now been revised to the lows of the tail at 44880.

A close below 44880 considers further downside with the initial target being the previous low at 43830. In this situation failure of a downside move is considered with a close above 45180. For renewed faith in an upside move, a close above the 46045 level is necessary. 

Click here to view South Africa 40 chart

Equities in focus

Investec Limited

Investec Ltd has been trading in a broad channel over the last year or so.

The short term decline looks to have ended with a candlestick reversal pattern (bullish Harami) circled blue. The Stochastic has crossed its trigger line in oversold territory and is displaying a positive divergence with the price (red lines). The volume on the recent decline has been low on a relative basis. These are considered bullish technical indications and a short term rebound to resistance at 11970 is favoured.

A close below a recent low at 10480 considers the failure of the aforementioned bullish indications.  

Click here to view the Investec chart

Brait Se Limited

The short term pullback from the recent highs looks to have ended as the Brait Se share price starts to reverse off trend line support. Supporting the price action, we see the Stochastic starting to move out of oversold territory whilst displaying a positive divergence with the price. These indications appear bullish and a move towards the recent closing high at 16000 is favoured. A close below the short term low at 13500 would consider the failure of the aforementioned bullish indications.

Click here to view the Brait se chart

Discovery Limited

After breaking out of the inverse head and shoulders (IHS) formation labelled L, H and R, the price of Discovery has retraced back towards the breakout level (12850).

The pullback sees the Stochastic in oversold territory whilst displaying a positive divergence with the price (dotted red lines). These are considered bullish technical indications and favour a move back to resistance at 13885. A further target is considered at 14450, which is a projection form the IHS formation.

A close below support at 12850 considers the failure of the aforementioned bullish indications.

 Click here to view the Discovery 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 18/08/2015

Investec Limited

Source: ProRealTime charts, as of 18/08/2015

Brait Se Limited

Source: ProRealTime charts, as of 18/08/2015

Discovery Limited

Source: ProRealTime charts, as of 18/08/2015

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