$STXIND Change of polarity on the JSE's Industrial sector
The above chart is a perfect display of the concept of 'change in polarity'. This principle asserts that once breached, a support level becomes a resistance level.
You'll notice how this level of +- R72.30 was a major support level in 2018 that held on multiple occasions. Eventually we got the break through in Sept 2018 and the bulls caved in completely, seeing the index fall another 15% to reach a level of 61.00. Since seeing those lows the index has done well to move higher and retest this significant level which has now become clear resistance. We tested this level as recently as early May and failed. We are currently retesting this level once more and it looks like the market is rejecting and failing for the second time at R72.30. Likelihood here is that the components of this index will find it very difficult to gather enough steam to breach this point of polarity and we could see the chart move lower in time. Also notice how price has managed to equal the same level but RSI has made a lower high which is also an indication of bearish divergence and further adds conviction to a possible move lower in this chart. Naspers and Richemont make up the bulk of this index, so be careful in those two counters specifically!
You'll notice how this level of +- R72.30 was a major support level in 2018 that held on multiple occasions. Eventually we got the break through in Sept 2018 and the bulls caved in completely, seeing the index fall another 15% to reach a level of 61.00. Since seeing those lows the index has done well to move higher and retest this significant level which has now become clear resistance. We tested this level as recently as early May and failed. We are currently retesting this level once more and it looks like the market is rejecting and failing for the second time at R72.30. Likelihood here is that the components of this index will find it very difficult to gather enough steam to breach this point of polarity and we could see the chart move lower in time. Also notice how price has managed to equal the same level but RSI has made a lower high which is also an indication of bearish divergence and further adds conviction to a possible move lower in this chart. Naspers and Richemont make up the bulk of this index, so be careful in those two counters specifically!
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