Senior Analyst, Rand Swiss

Shaun is a senior analyst specialising in derivatives trading and technical analysis across index, commodity, FX, and equity markets. With nearly 20 years of experience in financial markets, Shaun brings deep expertise to his role, presenting research and analysis to Rand Swiss clients. Shaun is a regular commentator on local and global financial markets, contributing to major media outlets including CNBC Africa, Reuters, Moneyweb, and Business Day. He produces daily and weekly market reports focused on technical analysis and trading opportunities in his core markets. As a registered person at the JSE and a Certified Financial Technician (CFTE), Shaun combines formal credentials with practical market expertise.

You can follow Shaun on Twitter at @ShaunMurison_RS for regular market updates and trading insights.

Momentum extends, but overbought signals emerge

Markets have extended their recent advances, with key indices and commodities pushing through resistance levels while currency trends remain intact. Momentum is evident across several asset classes, although overbought conditions in parts of the market suggest that selectivity and disciplined risk management are becoming increasingly important.

Inside this week’s edition of Tech Tuesday:

• J40 Cash Index
• ZAR
• Commodities
• JSE Sector Analysis & Trade Setups

J40 Cash Index

The break of the 13870 level unlocked a relatively effortless move towards (not yet realised) our 117661-resistance target. While the 117661 and 119124 targets remain, the move higher has pushed the index back into overbought territory. Traders who have been long into the move might consider starting to lock in profits, or tightening their respective stops to a close below the one day low.

ZAR

USD/ZAR

The USD/ZAR remains in a long-term downtrend (rand strength/dollar weakness). In the short term, the price has moved into a sideways consolidation.

The downtrend suggests keeping a short bias to trades on the currency pair, looking for new entries into strength and targeting a move back towards the R15.63/$ mark. Only on a move back above the R16.30/$ mark would we consider the long-term downtrend to have been broken and reconsider our trade bias.

The red lines on the chart also highlight a triangle consolidation. This pattern is a suggestion that the preceding trend (down) could be setting up to continue. For now, we will assess each level as it comes.

Commodities

Gold

The break above resistance at 5090 suggests that gold’s long-term uptrend is now resuming. 5443 and 5597 are the respective upside targets from the move.

The price has now moved into overbought territory, although it is our view that the trend takes precedence.

However, should a pullback ensue, traders might look to re-enter long. Traders who are already long gold might consider using a close below the two day low as a stop loss indication.

Brent Crude Oil

The price of brent oil rallied through both of our upside resistance targets from last week. The break above 71.42 suggests 73.67 as a further upside target from the move. Brent is however overbought at current levels. Traders who are still long might consider using a close below the previous days low as a stop loss indication. Traders looking for new long positions might prefer to buy into the first pullback from current highs.

Financials

Growthpoint

The share price of Growthpoint is consolidating the uptrend within a narrow sideways range. A small sideways consolidation is often considered bullish as it shows the price as being reluctant to correct lower despite the significant gains which preceded.

Traders might look for long entry should a break above the 18.94 resistance level manifest. In this scenario, overhead resistance at 19.80 provides the upside target, while a close below the midpoint of the range might then be used as a stop loss consideration for the trade.

Resources

Kumba Iron Ore

The long-term trend for Kumba is up. In the short term we have seen a bullish price reversal off support (circled blue) and from oversold territory. This suggests renewed gains for the stock with gap resistance at 382.63 the initial target. Traders who find long entry might consider using a close below support at 345.22 as a stop loss consideration.

Africa Rainbow Minerals

The share price of African Rainbow Minerals has formed a bullish price reversal off support at 210.47. The reversal from oversold territory suggests renewed gains, with resistance targets considered at the 248.39 and 256.96 levels respectively. Traders who find long entry might consider using a close below the 210.47 level as a stop loss indication.

Sibanye Stillwater

The share price of Sibanye has formed a bullish price reversal off trend line support near oversold territory. The reversal suggests renewed gains with upside resistance targets considered at the 70.50 and 77.05 levels respectively. Traders who are long might use a close below the low at 57.40 as a stop loss indication.

Impala Platinum 

The share price of Impala looks to have ended its near-term correction from all time high territory, with a double bottom reversal pattern (W shaped price action below the red horizontal line). The break above the 300.78 level suggests gains are resuming with 344.37 the initial resistance target. Traders who find long entry might consider using a close below the 279.46 level as a stop loss indication.

Industrials

Retail