This morning we take a look at the technicals on the USDZAR, TFG and Spar Group.
1. USDZAR: As previously suggested in our note on Monday 08-April-2019 (above R14.07), the technical indicators suggest downward momentum on the pair. This was evident this past week with the price trending toward a low of R13.87 before closing the week at R13.94. At current levels, the RSI and Momentum reflect a downward but slowing trend with a falling wedge pattern starting to build, suggesting that we could see a potential reversal of Rand strength and that prices are nearing a short term bottom.
2. TFG: Recent results from the company reflected a performance in contrast to the rest of the retail sector which showed poor earnings growth and disappointed investors considering the valuation. This morning I am taking a look at the share on a technical basis, from a medium term equity portfolio perspective.
As per the weekly chart, the share is signaling the potential to make further advances from the base which has been built since June 2018. While the price has traded in a sideways range and the high for last week was below the 12-month low, the Relative Strength Index gave a bullish indicator, testing the highest level since May 2018. A look at the historical price action suggests that a break of the trend line could set the share up for a ‘momentum run’.
Whilst the weekly chart reflects a bullish setup, it is crucial that traders take note of the daily chart as well as other lower time frames. The reason being that there may be short term pullbacks (overbought on lower time frame) which allow for traders to obtain a better (lower) entry thus minimizing the risk of being temporarily ‘out of the money’. Here, the first ‘resistance’ level is around R183.85, which may provide a short/sell opportunity before the next leg higher.
Bottom Line: Short term may be nearing overbought (watch 184/186 resistance). Medium term may be an opportunity to get long (buy) for a momentum run.
In the realm of short term trading, prices are fast-moving and profits (and sometimes losses) are quick which means that traders only have a window of opportunity to act. On a daily basis, the Unum Capital Trading Desk accesses internal research (which includes, general research, key technical levels across all asset classes, trade ideas etc) which is used to identify attractive risk-to-reward money making opportunities. This is particularly relevant in the geared (CFD) trading space where a small move in prices can often lead to reasonable and consistent gains. While establishing a long term investment portfolio should be a part of one’s overall strategy, short term movements in price can mean ‘profit while you wait’. In other words, what may appear to be ‘noise’ can be used to produce gains on a consistent basis. To take advantage of such opportunities, please chat to the Unum Trading Desk by calling Tel: 011 384 2923 or e-mail firstname.lastname@example.org. To access today’s internal note, please click on the icon below.
#3. Spar Group: I will attempt to technically analyze Spar through the eyes of both short term (CFD) and medium and long term (equity portfolio) traders and investors. The reason for this approach is to identify short term levels whilst keeping the bigger picture in mind. In the short term, the share is showing positive price action as it attempts to breach it’s downward trend line (potential medium term bull flag) whilst also having regained the 8, 21 and 50-day momentum moving averages. On the upside, we may see the share attempt to re-test the 209/210 level. This is where the overhead resistance is situated and also where short term traders could look to enter a short (provisional level).
The medium term view sees the price finding technical support on it’s 200-day moving average. From the above short/sell, I am viewing monitoring the 194/195 level, which is the top of the bull flag as an accumulation zone with the potential for the share to test 21000c and possibly 21700c.
What is also interesting to note is that Spar is starting to outperform the general retail sector (Code: J537), having broken out on the upside as per the weekly chart view. https://www.tradingview.com/x/ut5C6VPa/
Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities.
All the best,
Unum Trading Desk Analyst
Tel: 011 384 2923