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Having reached its downside target, the JSE Financial 15 index ('fini 15') is on the verge of a potential upside breakout, which will be good news for large-cap financial stocks, especially banks.
JSE Financial 15 Index – Testing breakout level
Recommendation: Buy FINDI stocks
Current Trend: Short-term sideways. Med-term down, but oversold. Long-term sideways.
Strategy: Buy on a breakout above line 3.
(Daily)
Chart Setup: The fini 15 index reached its downside target from a head and shoulders pattern (shown on its line chart when we last showed it). It has rallied from there and is currently moving up through line 2 resistance, and testing line 3 resistance (16 700).
- Its short-term Stochastic (on top) is not yet overbought and can more higher.
Strategy Details: Buy large-cap financial stocks on a close above line 3 i.e. a close above 16 700 on this index.
Target: Once it closes above line 3, look for a move to 18 200, based on its recent consolidation pattern (which is an inverse head and shoulder-type pattern).
Stop-loss: A close below 15 800 (using this index as a guide for large-cap financial stocks). This index was at 16 640 at the time of writing.
- Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend trading courses, please go to www.themarket.co.za
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