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.

Markets consolidate recent volatility

Inside this edition of Tech Tuesday:

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

J40 Cash Index

The J40 cash index retested resistance at the 113870 target, and as of yet, has failed to close above this level and confirm a breakout which could unlock a move towards 117661.

As it stands now, the long-term uptrend is still firmly intact. As such we do continue to prefer a long bias to trades on the index.

The guidance remains the same in that, we are looking for a close above 13870 for an upside breakout, or if a deeper pullback ensues a reversal closer to trend line or horizontal support, both of course for long entry.
The ZAR

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.

Commodities

Gold

The long-term trend for gold remains up although in the short term it appears that the price has now moved into a sideways consolidation. The declining volume pattern reinforces the suggestion of a short-term consolidation. The long-term uptrend remains in favour of keeping a long bias to trades. New long entry may be found on a bullish break above the 5090 level, or on a bullish reversal closer to trend line support. We will update guidance accordingly should either scenario present itself.

Brent Crude Oil

The price of brent oil looks to have formed a bullish price reversal off the 66.93 support level. The reversal suggests 69.60 to be an initial target from the move. A close above this level would suggest 71.39 as a further upside target from the move. Traders who are long might consider using a close below the one or two day low as a stop loss indication.

Financials

Investec Ltd

The share price of Investec has been grinding higher to test range resistance at 135.22 multiple times. In so doing, the price has been showing a bearish divergence with the stochastic indicator. The long upper wicks on the candles at resistance suggest price rejection at higher levels.

A move towards 131.44 and 128.54 is now favoured, while a close above the high at 137.25 might be used as a stop loss indication.

Discovery

The share price has completed its first pullback from new high territory. The bullish reversal off the 232.01 support level suggests that the long-term uptrend could extend with 245.35 a projected resistance target for the stock. Traders who are long might consider using a close below the 227.80 as a stop loss indication.

Resources

Harmony Gold

Harmony Gold is once again testing range support at 316.86. The long term trend for the stock remains up. As such, we continue to favour a long bias to trades on Harmony.

For new long positions we would like to see a strong bullish candle form off the 316.86 support level, in which case a move towards 355.82 becomes favoured, while a close below 310.86 might then be used as a stop loss indication.

There is heightened volatility in the resource space at present, so smaller position sizes and extra caution is advised.

Industrials

Bid Corp

The share price of Bid Corp looks to be in the early stages of a longer-term trend reversal. The price looks to have completed a consolidation since the trend line breakout and is now starting to resume gains. Should the price manage to close above the 432.59 resistance level, 450.24 becomes a further upside target. Traders who find long entry might consider using a close below the 417.98 level as a stop loss indication.

Richemont

The share price of Richemont looks to be finding support off the 3204 level which had previously acted as resistance. The recent move lower also acts as the first pullback from the strong move higher. 3377 becomes the initial upside target favoured. A close above this level would suggest 3461.30 as a further upside target. Traders who are long might consider using a close below the 32.04 level as a stop loss indication.

Sasol

The share price of Sasol has now traded to range resistance. The move higher has also pushed the price into overbought territory. The sideways trend suggests opportunities for both longs or shorts depending on where therein the price lies.
For new short positions traders might prefer to see a bearish reversal off the 128.81 resistance level and a close below the 119.79 support level. In this scenario a move towards 107.81 is favoured, while a close above 128.81 might be used as a stop loss indication.

Telkom

The share price of Telkom has produced its first pullback from recent highs. The pullback has found support and now started to reverse off the 55.49 level. A move towards the 61.83 and 62.99 levels (respectively) is favoured. Traders who are long might consider using a close below the 57.62 level as a stop loss indication.

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