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Speculators can play - analysis

Johannesburg - The JSE All Share [JSE:J203] index this week again tested its 200-day moving average (31 650).
 
It is comforting that investors used this level as a buying opportunity, as technically it's a bad sign if the index’s graph falls below the moving average.

But it's concerning that the index is moving increasingly close to the moving average and still struggling to break upwards through the recent high of 32 400.
 
Caution should therefore be the watchword for long-term investors. However, speculators are finding many opportunities in a market that has been consolidating in the 30 000 to 33 000 band for almost 12 months.

Absa Group [JSE:ASA]

The daily chart of Absa’s share price currently reflects an opportune trading range, as indicated by lines A and B.

This band offers speculators ideal opportunities – buy close to line A (R130 to R130.50) and sell when it approaches R138.

Use R128 as a stop-loss to protect capital.

Medium and long-term investors can also buy close to A, hoping that the share will sooner or later break out above R138.

EOH Holdings [JSE:EOH]

EOH’s share price has had a fine 23% run over a  month, on the back of rumours of impending corporate action.

For investors concerned that the corporate action might not materialise, support line A presents a great technical guide.

Hold on to the share while it consolidates above R22.20.

Should the support collapse on a Friday evening, this can be regarded as a sign of early technical weakness. Concerned investors would do better to lock in profits below line A.

- Sake24

For business news in Afrikaans, go to Sake24.com.
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