SA40 Cash Index Review

SA40 Cash Index bullish range trade setup.

SA40 18072018

The bullish trade scenario we were looking for (previous note below) has now manifested. Circled blue we see a piercing line candle pattern. The reversal pattern is supported by the Stochastic crossing out of oversold territory.

The initial target favoured from the move is considered at 51400. A break of this level calls for a move to our next resistance level of 52000. A close below 48940 is used as our failure / stop loss level in the current trade scenario.

SA40 Cash Index (Previous)

SA40_17072018

The SA40 Cash Index has conformed to the bearish signals highlighted in our last note (price reversal supported by overbought signal).  The 50417 level was broken and the downside target of 48940 has now been realised.

While the downside could extend towards the 48170 we are happy to exit short positions and lock in profits as we have now moved back into oversold territory. The index is in a non – trending environment and we therefore prefer to trade towards targets rather than ride out “trends” (which don’t appear to be in place.

We are now waiting for a bullish reversal above the 48170 level, supported by a move out of oversold territory, for long entry.

 Alternatively, for a continued downside move (and short entry) we would like to see a close below 48170 (major low), in which case we would be targeting a move to 46400 whilst using a close above 48940 as the stop loss / failure level for the trade.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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