Technical Tuesday

26 May 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:

Naspers Ltd

Pick n Pay Holdings Ltd

Clicks Group Ltd

South Africa 40 index

Technical view

The South Africa 40 cash index has failed to find any traction in the move up from the tentative breakout and the guided support level at 47725 has been broken with significant force.

Possible levels of downside support considered are nested between levels 46900, 46700 and 46500. Should the price not manage to reverse at or before these levels, a close below 46500 considers a move to the next level of support at 45585.

The sudden sharp move down suggests traders with a bullish bias might refrain from attempting to bottom pick a long entry until at least the lower level of trend line support is reached at 46500 or a clear bullish reversal is evident.

Source: ProRealTime charts, as of 26/05/2015

Equities in focus

Naspers Ltd

The price of Naspers has formed a triangle consolidation. The low volume which has accompanied the non-directional price movement over the last few weeks as well as the narrowing volatility indicated by the Bollinger bands confirm the current consolidation.

Breakout traders would look to a close above 187000 for an upside breakout or a close below 180000 for a downside breakout. The height of the consolidation (13000) predicts a move of equal distance in the direction of the breakout after it occurs. Breakout traders might use a sudden surge in the volume and/or sharp widening of the Bollinger Bands as confirmations of a true price breakout.

As the long term trend remains firmly up, traders might favour waiting for weakness to play out before looking for long entry, rather than trading against this longer term uptrend.

Source: ProRealTime charts, as of  26/05/2015

Pick n Pay Holdings Ltd

The price of Pick n Pay has formed a triangle consolidation. The low volume which has accompanied the non-directional price movement over the last few weeks as well as the narrowing volatility indicated by the Bollinger bands confirm the current consolidation.

Breakout traders would look to a close above 5740 for an upside breakout or a close below 5540 for a downside breakout. The height of the consolidation (270c) predicts a move of equal distance in the direction of the breakout after it occurs. Breakout traders might use a sudden surge in the volume and/or sharp widening of the Bollinger Bands as confirmations of a true price breakout.

Source: ProRealTime charts, as of  26/05/2015

Clicks Group Ltd

The price of Clicks has formed a bullish price reversal (circled blue) off support at 8580. The share has also moved into oversold territory and we have seen relatively high volume accompanying the short term price reversal.

These indications have bullish implications and a range trade opportunity is considered at current levels with initial resistance the favoured target at 9200, a break of which further favours a move to the next level of resistance at 9400. A price close below 8400 would consider the failure of the bullish reversal. 

Source: ProRealTime charts, as of  26/05/2015

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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