••••
CO L U M N
Safex Scenario’s
with Susari
SUSARI GELDENHUYS
PRICES IN THE AGRICULTURAL MARKET HAVE BEEN PARTICULARLY VOLATILE DURING THE PAST SEASON DUE
TO HIGH LEVELS OF UNCERTAINTY ABOUT WHAT THE
FUTURE MAY HOLD FOR THE SOUTH AFRICAN GRAIN
MARKET. STOCK LEVELS, IMPORTS AND DELIVERIES ARE
BUT A FEW FACTORS WHICH RESULTED IN UNCERTAINTY (AND THEREFORE PRICE VOLATILITY) IN THE MARKET.
THE COMING SEASON, WITH REFERENCE TO UNCERTAIN
WEATHER PROSPECTS, WILL PROBABLY AGAIN RESULT
IN VOLATILE MARKET MOVEMENTS.
A
s a result, market participants find it very difficult to make decisions regarding investment and hedging.
However, there are two aids which
will contribute to a higher probability of success when such an
investment or hedging decision
needs to be considered.
Fundamental analysis and the
basis of technical analysis have
been discussed in previous articles,
where the previous article focused
on the analysis of different price
graphs. The article below expands
on the interpretation of different
candlestick price formations.
price formations exist, namely
reversal and continuation formations. The first indicate a possible
change of direction from the
current trend, while the latter
indicates a possible continuation
of the current trend. Within the
agricultural market the continuation formations are not generally
used and are therefore excluded
from the discussion below. The
most widely used reversal candlestick
PRICE FORMATIONS
As discussed in the previous article, a candlestick chart is one of
the most commonly used charts,
due to the ease of analysis of
such a chart. Two broad categories of the candlestick
38
OCT/NOV 2016 • SENWES Scenario
formations include, but are not
limited to: Doji, Bullish / Bearish
Engulfing, Hammer / Inverted
Hammer, Hanging Man, Star
(Shooting, Morning, Evening),
Dark Cloud Cover, Piercing
Pattern and Inside Candle. Both
the bullish and bearish candlesticks are presented graphically in
Table 1.i. and Table1.ii. respectively, to serve as a reference for
the candlestick formations discussed below.
a) Doji
The Doji is regarded as one of the
most important individual candlestick formations and forms a fundamental component of a wide
range of candlestick formations. A
Doji is formed when the opening
price and the closing price in a
trading session are theoretically equal, which
indicates a