Technical Tuesday

28 April 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:

Discovery Ltd

Foschini Group Ltd

Clicks Group Ltd

South Africa 40 index

Technical view

The South Africa 40 cash index has moved to and exceeded the trend line resistance target at 48500. The index remains in overbought territory, but as alluded to in previous weeks, this is less relevant than the strong uptrend which prevails.

However, traders that have been long for some time might consider the overbought signal a suggestion that profit taking could be a prudent option at current levels.

Swing traders and trend followers alike would be hoping for a retrace towards support at 47980, for an opportunity for long entry, targeting a retest of the recent high at 49298 with a trading stop loss considered should the price close below 47410 support.

The longer-term upside target, as projected from a weekly chart in previous weeks, remains at 49840.

Source: ProRealTime charts, as of 28/04/2015

Equities in focus

Discovery Ltd

The price of Discovery has formed a falling wedge pattern, whilst being in a longer-term uptrend. The pattern alludes to a slow cumbersome move down relative to the strong move up, which preceded, suggesting that the momentum remains bullish.

The resistance level at 13850 is the initial target favoured, followed by a retest of the recent high at 14400. A price close below support at 13000 would consider the failure of the bullish indication.

Source: ProRealTime charts, as of 28/04/2015

Foschini Group Ltd

The price of Foschini looks to be finding support on what was previously a resistance level at 18200. The move back to this level marks the first pullback from a new high since a breakout of this level (9375) occurred.

The Stochastic has moved into oversold territory and is showing a bullish divergence with the price (although not yet confirmed). Trend followers might consider this an opportunity to join the underlying uptrend with a move to retest the recent high at 20178 the initial target. 

A close below horizontal support at 17290 would indicate the short-term failure of the bullish considerations. 

Source: ProRealTime charts, as of  28/04/2015

Clicks Group Ltd

The price of Clicks looks to be finding support on what was previously a resistance level at 9375. The move back to this level marks the first pullback from a new high since a high volume breakout of this level (9375) occurred.

Trend followers might consider this an opportunity to join the underlying uptrend with a move to retest the recent high at 10050 the initial target. A close below horizontal support at 9090 would indicate the short-term failure of the bullish consideration. 

Source: ProRealTime charts, as of  28/04/2015

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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