SA40 Cash Index Review

Index remains in overbought territory.

  • Circled blue we see a bearish engulfing candle pattern
  • This marked the end of the move up and a trigger of the trailing stop guidance (close below 1 day low)
  • The index is once again in a short term consolidation between levels 51120 and 51928
  • The index remains in overbought territory
  • The current consolidation could be the index’s way of correcting out of overbought territory and we continue to respect the longer term upward trend in place
  • I.e. we are currently market neutral, waiting for long entry rather than looking to initiate short entry
  • A long entry would be considered should a bullish reversal off 51120 or 50425 occur
  • A break of the high (close above) at 51928 could also consider a long entry opportunity although this would need careful consideration in terms of managing the risk with a stop loss
  • Should either of these scenarios occur we will update with target and stop levels

Cash Index 16 October

1. The index has now traded through the first breakout target of 51700

2. Traders committed to this move, using a close below the 1 day low as an exit signal (as 10 October) would still be in the trade and would consider continuing to use this trailing stop methodology, whilst targeting the further upside target of 52340

3. The index appears to be in short squeeze territory providing little in the way of a pullback for new long entries as of yet

4. From current, the closest level we would consider looking for a new long entry (should a pullback occur) would be the 51120 level

5. We continue to respect the upward trend and remind traders of the inherent risks of trying to pick tops in markets

This information has been prepared by IG, a trading name of IG Markets 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. See full non-independent research disclaimer and quarterly summary.

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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.