For last several weeks volatility is the name of the game for the JSE. Top40 had another down week, closing 961 points lower and on Friday at one stage it was down by 1442 points. First two days were with slightly positive bias for the market, but then from Wednesday real selling came in. Thursday brought, after many months, more than 1000 points daily range with solid close below 200 simple moving average. On Friday market went up initially, just for bears to come in and push it lower. Top40 tested long term support at 22900 and luckily for bulls it bounced from there. Even Top40 broke low from early February and it managed to close above. Also, bulls should be worried by Top40 having two consecutive closes below 200 simple moving average for the first time in more than a year.
So, what we can expect in a week to come? Market will probably rally from these levels and test 200 simple moving average and trend line that is currently around 24500. Positive divergences on Relative strength index and Stochastic are pointing to that. However, after that we could see another downslide that should test horizontal support at 21500, what is at the same time target for broken channel.
Please be very cautious out there.
Moving averages, which help us to determine long, medium and short-term trends:
- long-term (200sma) - DOWN
- intermediate (89sma) - DOWN
- short-term (10ema) - DOWN