Technical Tuesday

31 March 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:

Aspen Pharmcare Holdings Ltd

Investec PLC (SA)

Mondi Ltd (SA)

South Africa 40 index

Technical view

The South Africa 40 cash index broke the 45550 support level intraday, although failed to confirm a downside breakout with a close below this level. The price has since reversed and is trading mid-range between horizontal levels 45550 and 46700. The move down from the highs has taken the form of a channel marked with the dotted black parallel lines.

While the price trades in the middle of both the channel and horizontal range, caution is preferred, awaiting a true directional move through a breakout. While underlying local financial markets are closed on Friday (and Monday) with U.S. jobs data scheduled for release, further caution is considered.

For an upside breakout we await a close above 46700 considering a move to retest the all-time high at 47410. Should horizontal support be broken at 45550 (confirmed with a close) channel support is considered at around 45000.

Source: ProRealTime charts, as of 31/03/2015

Equities in focus

Aspen Pharmcare Holdings Ltd

Aspen looks to have reversed its short-term decline after reaching the 200-day simple moving average (200MA). The bullish reversal has taken the shape of a double bottom pattern (black “W” on chart). The reversal is also supported by the Stochastic now moving out of oversold territory while showing a positive divergence with the price.

These indications are short-term bullish and a move towards resistance at 40400 is favoured, a break of which further favours 42000 as the next resistance target. A close below support at 36250 would consider the failure of the bullish indications. 

Source: ProRealTime charts, as of  31/03/2015

Investec PLC (SA)

Investec Plc has formed a morning star candlestick reversal after the short-term decline from its all-time high. The pattern suggests that the move down has come to an end with the possibility of a rebound in price to come. The Stochastic has crossed out of oversold territory supporting the bullish price indication.

Furthermore, the relatively low volume on the decline followed higher volume on the preceding move up suggesting that the enthusiasm remains with the bulls. A move towards resistance at 10690 is favoured, a break of which further favours a retest of the all-time high at 11000.

Should the price fall and close below 10015 the bullish indications would be deemed to have failed.

Source: ProRealTime charts, as of  31/03/2015

Mondi Ltd (SA)

Mondi Ltd looks to have completed the short-term pullback from its all-time high. The red parallel lines highlight a bullish flag formation and the price has now broken out of this pattern. These patterns show a weak move down relative to a strong preceding move up, suggesting that the momentum for the share remains positive.

The Stochastic is supporting the price as it moves out of oversold territory. The closing high at 24840 is the initial target favoured, while a close below flag support at 22430 would consider the failure of the bullish indications. 

Source: ProRealTime charts, as of  31/03/2015

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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