Week starting 20th April
RESI or Resources Index Outlook
A lopsided Evening star candle formation confirmed by red candle presents itself on the chart of the resources sector. We also have a descending triangle as well with a break down level target of 36800. With the short-term trading range has been between 36800 – 41400 which the trader should take note of in order to benefit from support and resistance levels within a 5 – 15 day trading period.
The medium term range has been 43000 – 33400 which is vital to note when looking at a medium term trading period of 2- 3 months.
These ranges can assist you to make decisions either for the medium term or for the short term. The current descending triangle forms part of the short term trade and will test the break down to the downside which could take us to the low range level back to 33400. The level at 36800 needs to be broken before the medium term range low of 33400 can be challenged.
The 89ma is acting as resistance currently. It would need to remain intact. The Stoch indicator is displaying oversold levels but could still move down. Caution should be taken at this point. Confirmation that short term negative momentum is still in play is the reverse negative divergence on the RSI and Stoch 3 indicators.
Based on this I am short in Anglo American at 18750. Implats should've been short as well from 17350 with a possible profit target of 15300 but first 16300 needs to be broken.
The resistance at 19500 level is strong. The Financial and Industrial index just bounced off the level and formed an evening star with 18900 as a first support level. The weekly and daily chart suggests short term negative movement with a support level at 18625 and then 18292.
A fair deal of reverse negative (hidden) divergence can be found on the FINDI which suggests negative momentum coming into the sectors over the coming week.
The weekly chart does indicate overbought levels in the short however the medium term indicates continuation of the trend to the upside with the potential for a target level at 21500 est.
SP500 Index Outlook
Sp500 is trading above the 89ma with resistance at 876 level and the support at 89ma which is 843 level. Other levels of support at 824 and 813 respectively. The weekly chart shows that the index is very overbought in the short-term where a 61% retracement would result in a 747 target.
Gold seems to have found support at $867. Keep an eye on Anglo Gold at 26900 support level. If this level breaks down then we could have another down movement in the share. If not however, we could see a return to 28000 and even 30000 which needs to be supported by the move in the dollar price of gold as well as the weakening in the dollar.
Evening star plus confirmation. Support broken at 20ema Stoch and RSI showing more negative movement either to 18851 or 18675. Last support is 18630 level.
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