Looking at where we stand at the moment, the weekly chart shows the close below the 89 week EMA which has happened at only 3 stages since October 2009 (when the 21 week EMA crossed above the 89 week EMA). The weekly stochastic remains bearish pointing firmly downwards and has room to fall before being regarded as oversold.
On the daily chart we can see the triangle breakout projected down to the 42,500 - 43,000 zone. However, the stochastic has flattened and may be reversing which could be indicative of short-term consolidation in the week ahead.
The daily support and resistance shows the previous support level around 45,3000 now shown as overhead resistance as we closed at minor 44,400 support. This minor support could potentially be the catalyst for short-term consolidation as noted above. However, we also need to look at the next major support as reflected by the slowly rising blue line in the chart. Again, this points to potential support only coming in around the 42,500 level.
Putting this all together, it appears as if there is a potential for near-term consolidation in the making but unless the T40 manages to regain major support above 45,300 we would look down towards 42,500 - 43,000 as a probable target area. For intraday trading we will therefore allow the shorts to run while taking quick profits on any long positions. I may also look for a potential short entry on a longer-term basis on a consolidation pullback within the next week or so if an acceptable reward-risk can be established.
The anticipated consolidation kicked off with a sharp bounce today as the daily stochastic also crossed over its signal line bullishly in oversold territory. The T40 couldn't hold onto its intraday highs though and was unable to breach the 45,300 level which would have seen the bulls start to take charge. The trading game plan intraday thus remains unchanged
ReplyDeleteWith yesterday's gains erased by a bearish session, the stochastic is flattening out in oversold territory as the previous minro swing low and resistance level at 44,400 was broken. The 42,500-43,000 target area highlighted above may well be within reach within the next couple of days as things stand. Intraday planning still remains quick counter-trend longs and longer trending shorts
ReplyDeleteA positive candle was painted as the market attempted an oversold consolidation today but the down bars are still outweighing the up bars at the moment and very little to suggest the T40 finding support at its current levels.
ReplyDeleteThe choppiness continues as the rand-hedge stocks in the T40 managed to mute much of the damage the market would have taken int heir absence. Nonetheless a long wick on a red daily candle points to the potential for further downside and at the triangle breakout target remains relevant.
ReplyDelete