TECHNICAL ANALYSIS: JSE All-share Index, a temporary pullback

(iStock)
(iStock)

The JSE All-share Index has had a solid run in recent weeks, breaking out above an important resistance level in the process.

It's giving a short-term consolidation right now before heading higher again, as shown on its chart.

Recommendation: Hold or this pullback.

Current Trend: Short- and medium-term up.

Chart Setup: The index is finally giving some sort of a pullback. Right now it is nearing some potential support at line 3 (55 650), but can drift lower, closer to its recent breakout level of line/s 2 (at the 55 000 level). It still has a higher target from a rounding bottom pattern.

  • Its short-term Stochastic can still fall further before becoming oversold, so the price can consolidate/or pull back more in the immediate short-term.

Strategy Details: It's a hold for the short/medium-term. But short-term traders that aren't in, buy on a reversal up from the 55 650 level at line 3, or if it falls below there, then from 55 000 at line/s 2.

Target: Up to 59 400 (labelled as T2), based on the height of its rounding bottom pattern, projected up. There will be resistance from last January (line 4) at the 58 950 level, which will be a prior target.

Stop-loss: A close below the reversal days low when buying on a pullback to line 3, or below 54 700 if buying near line/s 2.  

chart
 

* 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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