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.

J40 eyes reversal with gold while oil tests resistance

Local and global markets show early signs of technical reversals across key benchmarks, with the J40 testing resistance at its weekly balance point, the rand holding a familiar range against the dollar, and both gold and Brent crude rebounding off recent support levels. JSE Financials continue to outperform their industrial and resource counterparts, while Aspen shows a notable reversal within a broader consolidating industrial sector.

Inside this update:

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

J40 Cash Index

We have another bullish reversal forming of support at the 100,337-support level although not yet complete. For completion we would like to see today’s candle close above our weekly balance point at 101,522.

Should the reversal confirm, 103,198 becomes the initial upside target from the move, with 104,243 a possible further target. Should the reversal confirm, traders who find long entry might consider using a close below the 100,337 as a stop loss indication.

The 100,337 level has proven to be a key level of support, and should the reversal fail and this level not hold, 98,925 and 97,864 become downside support targets instead. In this scenario, a close above our balance point at 101,522 might be used as a stop loss indication.

USD/ZAR

The USD/ZAR pulled back to our support target from our last note at around 16.14, before starting to rebound off the level once again. The rebound seems to be losing some momentum post the US CPI inflation data, which catalysed some broad weakening for the dollar.

The 16.29 level is again being tested at the time of writing. A close below suggests a move towards the 16.14 level. Should the 16.29 level hold, further gains for the currency pair are favoured with 16.65 as a possible near-term target.

Commodities

Gold

The 4,000 level has proven to be a near-term level of support, with the price currently trying to rebound off the level. We are looking for a close above the dotted trend line on our chart, as well as the 4,098 level, to suggest that the rebound may have some momentum. Should we get the close above 4,098, 4,200 (not labelled) becomes our initial upside resistance target. A close above this level could unlock more meaningful gains (should it manifest). In this scenario, a close below support at 4,000 might be used as a stop loss indication.

Brent Crude Oil

The price of brent crude has rebounded sharply off lower support and from oversold territory. The rebound has taken the price through resistance at 83.08. The price is now testing the next level of resistance at 87.42. A close above this level would suggest 92.96 to be the next upside target from the move. Should the 87.42 resistance level not hold, 83 becomes our initial support target. We do not favour any trades on the commodity right now in lieu of the on-and-off nature of the Middle Eastern war.

Financials

JSE Financials remain the outperformer within our local market environment. The price of the index has slowly consolidated back towards long-term trend line support.

The slow pullback lower from what was overbought territory, further highlights the sector strength relative to its industrial and resource counterparts within the current uncertain market environment.

Shares on our watchlist for possible long opportunities include Firstrand, Standard Bank and Capitec. Shares currently excluded from this opportunity watchlist are Discovery and ABSA, due to the nature of aggressive negative short-term price action.

Resources

The Resource index has continued to grind lower. The move lower has taken the shape of a falling wedge formation. A falling wedge suggests that a short-term rebound may be nearing.

Gold and platinum producers remain under pressure and are weighing on the index, although heavyweight diversified miners such as BHP and Anglo American do still have healthy uptrends intact. BHP looks to have found and reversed off trend-line support post a short-term correction. The Glencore chart also shows promise in the current environment with a reversal off support and upside breakout currently underway.

Industrials

The industrial index shows a broader consolidation in the mix of non-financial and non-resource counters. Within this sector, we have seen retail counters under pressure while a handful of stocks (Telecoms, Richemont, Aspen, Bidvest and Remgro) have helped buoy the index.

Range-bound environments suggest trading to targets or waiting for a bigger breakout for directional commitment.

Our preference remains looking to find long entry into the outperforming shares within the sector, as in the names mentioned above. The underperforming (retail) counters have had a lot of risk priced in so find increased danger on the short side, although have not yet given enough indications that the prices are ready to reverse course just yet (perhaps with the exclusion of Shoprite).

Aspen

The share price of Aspen looks to have reversed off trend line support (circled blue). The reversal is supported by a move out of oversold territory. 158.59 and 160.54 provide upside resistance targets from the reversal. Traders who find long entry might consider using a close below the 144 level as a stop loss indication.