The South Africa 40 cash index closed below the downside breakout level at 44880, before proceeding to crash through the initial downside target at 43830 and realising a short term low at support level, 40730. Since then the index has formed a bullish engulfing candle pattern circled red whilst the Stochastic has ticked out of oversold territory.
These indications suggest the end of the short term move down and possible rebound to follow. However, at this stage, the trend bias remains to the downside and further gains are needed to restore faith in an uptrend. A bearish price reversal before 43830 would favour further downside with the initial target considered at 41700.
Traders might consider intraday timeframes to identify such a move. A close above 43830 would suggest the downside momentum has weakened and consider a neutral bias.
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