JSE Top 40 Index: Weekly Chart Analysis: Running +23%
- Lester Davids
- 1 day ago
- 3 min read
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Here's a breakdown of the current price action for the JSE TOP 40 (J200):
The 7-day trend is indicated as "Overbought".
The 14-day trend is "Very Bullish".
Comparison:
The 7-day trend suggests that the price may have risen too quickly and could be due for a pullback, indicated by "Overbought".
In contrast, the 14-day trend being "Very Bullish" suggests a stronger underlying upward momentum over a slightly longer timeframe. This indicates that while the very short term might be stretched, the broader short-term trend is still strongly positive.
Potential Trading Approach for ISE TOP 40:
Short Term (Approximately Next 1 to 10 Trading Days): The model notes, "Buyers In Control But Weakness On Lower Time Frame-Look For Pullback To 8 or 21-EMA (Buy Range) Before Next Move Higher".
Approach: While buyers are in control, there's short-term weakness. Look for potential buying opportunities on pullbacks to the 8 or 21-period Exponential Moving Averages (EMAs) as potential entry points for the next upward move.
Medium Term (Approximately Next 2 to 4 Weeks): The model indicates "Aggressive Buying Wait For Pullback To Enter Next-Alternatively If The Highs Fail To Hold Then Short Back To The 8 or 21-EMA".
Approach: There's aggressive buying in the medium term. Wait for pullbacks to enter long positions. Alternatively, if the recent highs fail to hold, consider shorting back down to the 8 or 21-EMAs.
Long Term (Approximately Next 5 to 8 Weeks): The model states, "Very Strong Move Buyers In Control But Don't Chase-May Fail At Attempt To Hold The Highs-If It Doesn't Hold Then The 8-EMA May Be A Short/Sell Target".
Approach: There's a very strong move with buyers in control in the long term, but caution is advised against chasing the price. If the highs fail to hold, the 8-EMA could become a potential short/sell target.
Overall Trading Considerations for ISE TOP 40:
Conflicting short-term signals: The "Overbought" 7-day trend contrasts with the "Very Bullish" 14-day trend, suggesting potential for short-term consolidation or pullback within a broader bullish context.
Focus on pullbacks for entries: Across all timeframes, the model suggests looking for pullbacks to the EMAs as potential buying opportunities.
Caution on chasing strength: The model advises against chasing the upward momentum in both the medium and long term, highlighting potential for failure to hold highs.
In summary, for the ISE TOP 40, the current view suggests underlying bullish strength, but with potential for short-term pullbacks. Traders should look for controlled entries on weakness rather than chasing the price higher.
Previous Post (05 April): JSE Top 40 Index: Weekly Chart Analysis
JSE Top 40 Index Analysis:
Short Term (1 to 10 days): The short-term reading is Oversold. This suggests that the index has likely experienced a significant decline and may be due for a rebound or consolidation. However, being oversold alone doesn't guarantee an immediate reversal.
Medium Term (2 to 4 weeks): The medium-term reading is Weak. This implies that the index has been trending downwards over the past few weeks, indicating underlying selling pressure.
Long Term (5 to 8 weeks): The long-term reading is Neutral. This suggests that over a broader timeframe, the index hasn't established a clear upward or downward trend.
Overall Assessment:
Taking into account the weighted importance (short-term being the most significant), the JSE Top 40 Index exhibits deteriorating price action. While the oversold reading in the short term might offer a temporary bounce, the weakness in the medium term, coupled with the lack of a strong long-term trend, suggests caution. The recent price action is more aligned with the medium-term weakness than the potential for a short-term recovery.
Lester Davids
Analyst: Unum Capital
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