Bovespa

The Brazilian Bovespa Index encountered strong resistance at 58000, the spike in volume [R] warning of selling pressure. Breach of the rising trendline would warn that the rally is fading and another test of support at 48000 is likely. Failure of support would offer a target of 38000*.

Brazil Bovespa Index

* Target calculation: 48 – ( 58 – 48 ) = 38

Rand weakens

A three-year chart shows strong support for the US dollar at R6.50. Earlier breach of the descending trendline and rising 63-day Twiggs Momentum both warn that the Rand is likely to weaken. Now we have a break above resistance at R7.00 testing the 2011 high of R7.35. Breakout would signal an advance to R8.00*.

South African Rand

* Target calculation: 7.30 + ( 7.30 – 6.50 ) = 8.10

Bovespa and JSE weaken

The bear rally on the Brazilian Bovespa Index has run out of steam and we can expect another test of support at 48000. 13-Week Twiggs Money Flow below zero signals continued selling pressure. Failure would offer a target of 38000*.

Brazil Bovespa Index

* Target calculation: 48000 – ( 58000 – 48000 ) = 38000

The JSE bear rally respected resistance at 30000. Money Flow is stronger, but reversal below 28000 would offer a target of 26000*.

JSE Overall Index

* Target calculation: 28000 – ( 30000 – 28000 ) = 26000

Rand weakens

The US Dollar strengthened against the South African Rand, testing resistance at R7.35 before retreating to support at R7.00. Respect of support would indicate another test of R7.35. In the long term, breakout above R7.35 would signal an advance to the 2010 high of R8.00.

South African Rand

* Target calculation: 7.35 + ( 7.35 – 6.50 ) = 8.20

Buying support for resources

The Bovespa Index rallied strongly off support at 48000 and is likely to test resistance at 58000. Breach of the descending trendline on 13-week Twiggs Money Flow indicates short-term buying pressure. But we are in a bear market and this is unlikely to change in the near future.

Brazil Bovespa Index

* Target calculation: 58000 – ( 72000 – 58000 ) = 44000

Another resource-rich market, the JSE, signals medium-term buying support with a bullish divergence on 13-week Twiggs Money Flow. Recovery above 30000 is likely, but we remain in a bear market and can expect a future test of support at 27000*.

South Africa JSE Overall Index

* Target calculation: 30000 – ( 33000 – 30000 ) = 27000

South African Rand

The dollar spiked briefly above R7.35 but is now retracing to test support at R7.00. Long term, the Rand is expected to hold above support at R6.50 and breakout above R7.35 would signal a primary up-trend.
South African Rand ZAR

* Target calculation: 7.25 + ( 7.25 – 6.50 ) = 8.00

Brazil and South Africa

The Brazilian Bovespa Index broke support at the 2010 low of 58000. The strong primary down-trend brushed aside expected support at 55000, offering a long-term target of 44000*.  13-Week Twiggs Money Flow below zero confirms strong selling pressure.

Brazilian Bovespa Index

* Target calculation: 58000 – ( 72000 – 58000 ) = 44000

The South African JSE Overall Index broke through 30000 to indicate a primary down-trend. Expect retracement to test the new resistance level but 13-week Twiggs Money Flow below zero warns of selling pressure. Support at 29000 is not likely to hold and, with the calculated target at 27000*, the next major support level is 26000.

JSE Overall Index

* Target calculation: 30000 – ( 33000 – 30000 ) = 27000