JSE40 breaks back above 50-day moving average
JSE Top 40 USD Net Index (JSE40) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
JSE40 finished the week 2.91% higher at 3772.91 after gaining $16.69 (0.44%) today. Today's close at 3772.91 marks the highest recorded closing price since January 24th. Trading up to $18.90 lower after the open, the stock index managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (JSE40 as at Feb 14, 2020):
Friday's trading range has been $39.88 (1.06%), that's far below the last trading month's daily average range of $67.62. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for JSE40. Prices continued to consolidate within a tight trading range between 3718.56 and 3791.25 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Hikkake Pattern.
The index managed to close back above the 50-day moving average at 3769.61. Prices are trading close to the key technical resistance level at 3818.45 (R1). After having been unable to move lower than 3735.23 in the previous session, JSE 40 found buyers again around the same price level today at 3741.52. The last time this happened on February 3rd, JSE40 gained 3.08% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 3791.25 where further buy stops might get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. Its common bullish interpretation has been confirmed for JSE 40. Out of 74 times, JSE40 closed higher 62.16% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after nine trading days, showing a win rate of 55.41% with an average market move of 0.60%.