08 Aug 2017 iSayiTrade Technical
For the first time since 24 April 2015 the JSE All Share Index made a new high last week. This is a welcome break from the sideways movement we experienced for more than two years. Sideways sounds boring, but we experienced huge volatility in the period with a few 9,000 point or 15% swings.
Good news is that the Index has now broken out of what is called in Technical Analysis, an Ascending Right Triangle. The resistance line (top line) is nearly flat, but the lows keep on getting higher (the support or bottom line). The Ascending Right Triangle operates like a winding spring as the lows (bottoms) keep on getting closer to the resistance line. The breakout is usually quite strong when it finally breaks out.
The upside target is 63,500 points, 13% higher than the current level of about 56,000, calculated by adding the distance between the lowest point and the resistance line to the breakout point.
A note of caution though. There might be a bit of a pullback as the MACD oscillator shows the Index is in overbought territory.
Head Sanlam iTrade.