On the daily charts we see the flag breakout on Friday and the failed stochastic reversal - all extremely bullish and indicative of further upside.
The support and resistance levels show us now approaching the April peak with the potential for some resistance on profit-taking but we'd then look for a move through this level and into uncharted territory.
So overall a bullish scenario in place and the plan is to keep letting long-side trades run as far as possible while taking quick profits on the counter-trend positions in the week ahead
The anticipated resistance at the all time high was encountered intraday today and the market pulled back in a manner which was somewhat exacerbated somewhat by the MTN Nigerian news impact which forced a somewhat bearish looking daily candle to start forming (although the market did manage to close off its lows post the closing auction period.) Its difficult to call a short-term direction here but a clear break and hold above 49,000 would probably be a sign of continued bullishness whereas the 48,200 level would have to hold at the close tomorrow or further downside could be on the cards. We could see some chop within that 800 point range over the next day or so before the direction is resolved
ReplyDeleteThe market chose the downside route and we closed almost dead on that 48,200 level noted yesterday where the support line needs to hold. The daily stochastic is however now looking a bit fragile as it reverses off the oversold level and we could potentially see further weakness in a throwback to the top of the flag pattern around the 47,900 level as this oversold condition plays out before a bounce coming through.
ReplyDeleteA very tight intraday range on the T40 today and with a close very near to the 48,200 level that support level is still in play. The intraday action also played out pretty much in line with expectation with a near perfect throwback and bounce off the 47,900 level. Overnight a lot focus is on the FOMC which can scupper the best of plans but from what can be seen in the charts, the stochastic remains firmly pointing downwards and its now critical that price bounces from 48,200. If this breaks we have downside levels at 47,700, 47,500 and then we're into the major support zone from around 47,200. Conversely a bounce could trigger another failed stochastic reversal opening the upside again. Either way the plan is to let any breaks run as far as possible in the next couple of days.
ReplyDeleteOn an end of day basis price has now broken below the 48,200 level and near the 47,900 level is again flirting with the top of the flag pattern. A close below 47,700 would probably invalidate the original flag break and lead to further downside towards the support levels noted yesterday and a sharp bounce from here is now needed. The daily stochastic still looks short-term bearish but interestingly yesterday's close put us dead-on the 61.8% retracement level on the break from 20 - 23 October
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