Technical Tuesday
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The outlook for the South Africa 40 Cash Index, Gold, Oil and the Rand
Breakout, trend following and pair trading opportunities on local and international shares
Entry levels, target prices and failure levels
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Contact us: 010 500 8624
Call 010 500 8624 or email newaccounts.za@ig.com to talk about opening a trading account. We're around 24 hours a day from 9am Saturday to 11pm Friday.
Contact us: 010 500 8624
17 September 2024
In the report this week, we look at the following markets:
- South Africa 40 Cash Index
- USD/ZAR
- Spot Gold
- Brent Crude Oil
- Gold Fields vs Newgold Issuer
South Africa 40 Cash Index
The South Africa 40 Cash Index has managed to produce the close above 74420 (red arrow), and is now extending gains suggested from the oversold and divergence signals highlighted previously.
75830 provides the initial upside resistance target from the move, while traders might consider having a stop loss situated at a close below the two day low.
The relatively tight stop loss considers key central bank meetings this week and their propensity to induce short term volatility.
Cash adjustment expected
The South Africa 40 Cash Index is expected to adjust for a dividend in the underlying of around 29.4 points on Tuesday the 17th of September 2024.
USD/ZAR
The USD/ZAR produced the bearish reversal scenario off the 18.00 resistance level before returning to support at the 17.65 level.
The price has confirmed a break below this level with 17.55 now in close proximity.
A busy week in terms of central bank activity cautions trades on currency markets.
However from a purely technical perspective, traders might look to see a close below 17.55, before targeting a move to support at 17.40. In this scenario a close above 17.65 might be used as a stop loss consideration.
For long entry instead, traders might prefer to see a close back above the 17.65 resistance level. In this scenario, 18.00 once again becomes the resistance target from the move, while a close below the 17.55 might be used as a stop loss indication.
Spot Gold
Gold produced the upside breakout scenario presented in our previous note and has since traded to the resistance target at 2585.
The move higher has put the price back into overbought territory. Traders who were into the move might consider exiting there trades at current levels waiting for a new long entry opportunity.
Ideally new long positions would be considered on a pullback towards support between the 2530 and 2485 levels.
Should this opportunity or another present itself we will update guidance accordingly with targets and failure levels.
Brent Crude Oil
The price of brent crude has rebounded off the 69.70 support level and produced an upside break of the 72.20 level. The upside break suggests 75.00 to be the next resistance target from the move. Traders who are long might consider using a close below the 71.15 level as a stop loss indication for the trade.
Gold Fields vs Newgold Issuer
The pair considers a Long Gold Fields position against a Short Newgold position. The net result of these combined trades looks for a 15% profit margin. A stop loss is considered of equal proportion to the expected gain.
A successful pair trade can be realized 1 of 3 ways:
1. The long position rises while the short position falls
2. The long position rises faster than the short position rises
3. The short position falls faster than the long position falls.
The blue line on the chart represents the Gold Fields / Newgold ratio which recently traded more than 2 standard deviations below the mean (middle line). A successful trade would require the ratio (blue line) to return to the mean to meet the guided profit target.
Get full report
For the full report, which adds trade opportunities on local and international shares, click the link below
Get full report
For the full report, which adds trade opportunities on local and international shares, click the link below
Shaun Murison
Our weekly technical report is compiled by in-house senior market analyst, Shaun Murison.
Shaun has worked in financial markets for over ten years. As market analyst, he presents our CFD trading seminars around the country. In addition, Shaun is a regular commentator on the local financial markets, contributing to various media (such as CNBC Africa and Business Day) and writing daily and weekly market reports. He is a registered person at the JSE as well as a Certified Financial Technician (CFTE). You can follow Shaun on Twitter at @ShaunMurison_IG for regular market updates and insight.
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