Interesting graph on the FTSE/JSE All Share (ALSI). It is as if COVID-19 never happened. Not only are we close to break back into the trendline which started at the beginning of 2019, but we also saw the Golden Cross occurring this week. According to Investopedia.com, “the golden cross is a candlestick pattern that is a bullish signal in which a relatively short-term moving average crosses above a long-term moving average. The golden cross is a bullish breakout pattern formed from a crossover involving a security's short-term moving average (such as the 50-day moving average) breaking above its long-term moving average (such as the 200-day moving average) or resistance level. As long-term indicators carry more weight, the golden cross indicates a bull market on the horizon and is reinforced by high trading volumes.”
Should we see the momentum continue in the ALSI, a break and close above 57,000 could very much see the whole COVID-19 pandemic as a “false break”. Yes, I know it is crazy to think that with everything that has already happened in 2020, that the break could be false, and I would still like to emphasise all the risks currently associated with any long position in the market. Just remember that we did not see a correction this year from elevated levels (as we have seen with previous crashes).
I will remain neutral on the ALSI for now. I will monitor the bottom of the parallel channel for now as confirmation that the trend remains healthy. Also, all the Exponential Moving Averages (EMA) are pointing upward, which is a clear indication that the trend remains quite strong. Any trader who is considering shorting the ALSI currently, should wait for a break and close below the channel (currently at 54,900).
Should we break above 57,000, we could see next resistance level only at 58,750.
Should we see the momentum continue in the ALSI, a break and close above 57,000 could very much see the whole COVID-19 pandemic as a “false break”. Yes, I know it is crazy to think that with everything that has already happened in 2020, that the break could be false, and I would still like to emphasise all the risks currently associated with any long position in the market. Just remember that we did not see a correction this year from elevated levels (as we have seen with previous crashes).
I will remain neutral on the ALSI for now. I will monitor the bottom of the parallel channel for now as confirmation that the trend remains healthy. Also, all the Exponential Moving Averages (EMA) are pointing upward, which is a clear indication that the trend remains quite strong. Any trader who is considering shorting the ALSI currently, should wait for a break and close below the channel (currently at 54,900).
Should we break above 57,000, we could see next resistance level only at 58,750.