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.

Volatility rises as markets search for direction

Markets remain directionless at the index level, with consolidation the dominant theme across the J40, rand and key commodities. Below the surface, however, a number of JSE-listed counters are producing cleaner technical setups, with bullish reversals emerging across resources, financials and industrials.

Inside this update:

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

J40 Cash Index

The J40 index has broken to the downside and then the upside of the range highlighted in last week’s notes.

Volatility is on the rise as we see the size of the candles increasing.

There is still no clear direction for trade as we alternate between gains and losses everyday or every other day.

The most recent break is to the upside suggesting 109,232 as the next upside target. For now, our conviction in sustained direction is low. What we would like to see is some consecutive days of movement in the same direction rather than an alternating direction.

Traders looking to trade between key levels might prefer to trade smaller positions as we navigate through the consolidation.

ZAR

USD/ZAR

The reversal off resistance at 16.75 highlighted last week did well to predict the move to support at 16.29. Yesterday did see a close below this level suggesting a downside break, although today we are seeing ambiguity with a bullish reversal forming.

Before committing to the breakout or reversal we are looking to see how today closes. A positive close (as the price is trading at the time of writing) would suggest a move back towards resistance at 16.75. In this scenario, a close below the 16.14 level might be used as a stop loss consideration.

Should the price give up today’s gains and confirm yesterday’s break of support, 16.14 instead becomes the near-term target. The proximity of the support target and weaker risk-to-reward assumptions suggest traders might prefer to wait out the move should the downside break scenario ensue.

Commodities

Gold

The price of gold has moved into a short-term consolidation within a broader consolidation, furthering its lack of directional intent currently.

When markets are consolidating, we can look to trade between the levels (range trade) or wait for a breakout.

Key levels we see over the short- and medium-term are labelled on the chart above.

Brent Crude Oil

The price of brent has pulled back from overbought territory and resistance at 112.54.

The price now trades in oversold territory and within a longer-term uptrend (medium-term range).

A positive close today would suggest a bullish price reversal, with 105.28 the initial upside resistance target. Traders who find long entry into this confirmation (should it occur) might use yesterday’s (Monday) low as a stop loss indication.

Financials

ABSA Group

The share price of ABSA Group looks to have broken out of an inverse head and shoulders reversal pattern. The pattern suggests a change in short-term trend direction from down to up. 244.90 becomes the initial resistance target from the move. Traders who are long might consider using a close below 233.89 as a stop loss consideration.

Resources

Kumba Iron Ore

The share price of Kumba has produced a bullish price reversal off range support and from oversold territory. The reversal suggests a move towards resistance targets 321.42 and 334.06 respectively. Traders who are long might consider using a close below the 302.42 level as a stop loss indication.

AngloGold Ashanti

The share price of AngloGold has produced a bullish price reversal off support and from oversold territory. The reversal suggests a move towards resistance at 1,659, while a close below the 1,452 level as a failure level.

Valterra

The share price of Valterra has produced a bullish price reversal off range support and from oversold territory. The reversal suggests a move towards resistance targets 1,465 and 1,531 respectively. Traders who are long might consider using a close below the 1,279 level as a stop loss indication.

Industrials

MTN

MTN has undergone its first pullback from a new short-term high. The reversal off the 204.64 level targets a move back towards 219.55. Traders might use a close below the 204.64 level as a stop-loss consideration.

Retail