TECHNICAL ANALYSIS: JSE top 15 index downtrend to continue | Fin24
 
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TECHNICAL ANALYSIS: JSE top 15 index downtrend to continue

Aug 23 2019 20:45
Colin Abrams

The JSE financial 15 index has been battered in recent weeks, by a combination of a very weak local economy, as well as a very weak rand. Its chart is showing more downside to come unfortunately, before it finally bottoms.  

JSE FINANCIAL 15 INDEX – Downtrend not over yet   

Recommendation: Sell short (again) after a rally.

Current Trend: Short and med-term down. Long-term sideways.  

Strategy: Sell short fini stocks after a rally to 15 100 level.

Chart Setup: The financial 15 index is on its way down to 14 280, based on a breakdown of a large wedge (lines 2 and 3). It’s currently giving a relief rally (bounce), and then one more drop to come after this. 

• Its short-term Stochastic is oversold, which is still fairly bullish in the immediate short-term.  

• Elliot Wave analysis (labelled as roman numbers) shows the current bounce as a Wave-IV and points to one more drop (after the rally), to complete a Wave-V.  (There are five waves in an Elliot Wave sequence in the direction of the trend).

(Daily chart)

chart sharp

Strategy Details: Traders look to sell short large-cap financial stocks on a bounce to 15 100 on this index. (I’d like to see a reversal day down in that area to enter short).

  • Thereafter, we’ll be looking for a signal to go long financial stocks (especially banks) from line 1 (14 000) or lower. 

Target: A bounce to 15 100 level (or a bit higher), and then one final drop.  Line 1 support is at 14 000, which is a realistic downside target. 

Stop-loss: For shorting after a rally, the stop is a close above 15 500 Tighten it a lot as it nears line 1 (14 000).

  • 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

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

equities  |  jse  |  markets
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