Please note the South Africa 40 Cash Index is expected to adjust for a dividend currently estimated at 51 points on Tuesday evening (8 October 2019).
The share price of Spar has recently broken out of a triangle consolidation (circled red). The breakout suggests that the uptrend which preceded the triangle consolidation is now being continued. The height of the pattern projected from the breakout point arrives at an upside target of 20230. Should the share price instead move to close below the support of the triangle at 18750, the bullish breakout would be deemed to have failed.
The chart considered is that of Standard Bank(candlestick) with a Relative Strength Comparison (RSC) indicator added. The RSC (blue line) compares the price of one security with that of another in a ratio format. The RSC has experienced a decline in value recently which highlights that security 1 (Standard Bank) has been underperforming security 2 (Firstrand). Bollinger Bands have been added to the RSC and highlight the underperformance of security 1 reaching abnormality relative to the usual relationship of the two securities. It is expected that the relationship between the two securities will revert back to normality favouring a possible pair trade opportunity i.e. Long Standard Bank Short Firstrand. The target from the technical indications would be for the RSC to move back towards the 40MA (red line) which is regarded as the mean. This could occur with the price movements of the securities in a number of ways;
Should one of these scenarios play out successfully the expectation would be for a net gain of 5.3%. A stop-loss would be considered equal to the anticipated gain of 5.3%.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.