Weekly game plan 24 May 2020

It would seem that even though the world is feeling a little better about the coronavirus, fears and uncertainties around the trade relations between the U.S. and China are flaring up again. Moreover, it seems that relations between China and Hong Kong could be a negative catalyst that could bring some risk off sentiment into the market. Overall our feeling is still slanted toward bearishness.


The ALSI have a bit of a fake break above the indicated resistance level from last week, although nothing else seems to have changed much. We remain bearish on the local market (ALSI) for as long as it remains below the resistance level.


The same can be said for the SPX. As long as it remains inside the resistance zone and below the 126 day moving average, we maintain our bearish outlook. We have to remain open to the reality that anything is possible and that we could be aiming completely in the wrong direction. Although until we have enough evidence to confirm to us that we are indeed wrong, we will remain convicted in our current bearish view.


It’s almost ironic that we tote on for weeks about how we expect the Rand to strengthen and then finally when we acknowledge the possibility of weakness, it strengthens. We noted last week that a break of the channel would be indicative of which way any trade would be placed. The lower end fo the range had broken and barring any major macro or political catalyst, the USDZAR looks set to go test the 126 day moving average.


This setup is starting to look really good to us. BVT is now showing decent bearish divergence, while being inside its tightening consolidation. This trade could provide a really great risk-reward within the next week or two.


Interesting that IPL has formed a bearish engulfing candle at a key resistance level, while two of five momentum triggers have fired. This is an interesting trend following setup for us. This offers a great risk-reward trade as well.

*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.

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Every week needs a new plan!

Markets change all the time. New fundamental drivers emerge, technical setups mature or fail and our trading plan must adjust in order to keep up with the ever changing environment. Every week we highlight some of the trade ideas that are generated within our client community so that you can stay on top of what we're looking out for and planning to trade at the beginning of each week. 

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