Technical Tuesday

21 July 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:

Coronation Fund Managers Ltd

Omnia Holdings Ltd

Tiger Brands Ltd

South Africa 40 index

Technical view

The South Africa 40 cash index is currently testing last week’s initial resistance target at 47540. The momentum is reaffirmed as bullish, although a close above 47700 is needed before the next target of 48460 is considered. More importantly, above 47700 the larger head and shoulders mentioned in previous weeks loses its relevance. The index is overbought at the current resistance level whilst forming an intraday bearish candle at present. 

Should the current resistance level hold up and the price start to retrace towards the neckline of the Inverse Head and Shoulders pattern (labelled L, H & R), those trading in line with the bullish trend emerging might consider long positions. If the price does however retrace below the 45850 level, the short-term bullish momentum would be deemed to have failed.

Click here to view South Africa 40 chart

Equities in focus

Coronation Fund Managers Ltd

Coronation looks to be continuing the recent downtrend as it breaks out of a rising wedge formation. The pattern highlights a weak move up after a strong move down alluding to the momentum as remaining bearish. The share is overbought, as indicated by the stochastic, while the price has formed a bearish engulfing candle pattern.

These indications are bearish and the initial downside target is considered at 8050. Should this level be broken, 7760 and 7640 provide further support targets. A close above wedge resistance at 8540 would consider the failure of the bearish indications.

Click here to view the Coronation Fund Managers chart

Omnia Holdings Ltd

The price of Omnia Holdings has formed a triangle consolidation pattern following the short-term rally in price since late June. These patterns are referred to as continuation patterns in technical analysis as they have a habit of forming before the resumption of the preceding trend. It is however prudent to wait for a breakout occur rather than pre-empting the direction thereof.

The height of the pattern suggests a proportionate move of 860c in the breakout direction when a breakout occurs. For an upside breakout, a close above 18010 is considered. For a downside breakout, a close below 17400 is considered.

Click here to view the Omnia Holdings chart

Tiger Brands Ltd

The price of Tiger Brands has formed a cup and handle reversal pattern following the recent downtrend. This pattern (in the current context) alludes to a short-term rebound from the preceding move down.

The height of the pattern projected from the breakout level (red line) arrives at a proportionate upside target of 32250. Should the price fall and close below the 28500 level, the bullish consideration would be deemed to have failed.

Click here to view the Tiger Brands 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 21/07/2015

Coronation Fund Managers chart

Source: ProRealTime charts, as of 21/07/2015

Omnia Holdings chart

Source: ProRealTime charts, as of 21/07/2015

Tiger Brands chart

Source: ProRealTime charts, as of 21/07/2015

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