The JSE Top 40 Index (JSE: J200) has been a focal point in the markets, witnessing notable fluctuations in recent weeks. Last week, the index displayed resilience, rebounding by a robust 3%, erasing the losses incurred a fortnight ago. This positive momentum spilt over into the new week, with the index gaining 1.50% week-to-date, fuelled by back-to-back days of gains.
Financial services firms have emerged as standout performers this week, buoyed by the upbeat results of Capitec Bank, which bolstered positive sentiment across the sector. However, amidst the domestic market’s movements, attention has turned to the U.S., where pivotal events are set to unfold.
This week, all eyes are on the Federal Reserve’s Interest Rate Decision, scheduled for Wednesday, alongside crucial labour market data releases, including the highly anticipated Nonfarm Payrolls report. These events, coupled with geopolitical uncertainties, will play a pivotal role in shaping the short-term trajectory of the JSE Top 40 Index. Investors keenly await these developments as they assess the potential impacts on market dynamics and investment strategies.
Technical
The JSE Top 40 Index has been navigating a dynamic price action trajectory characterised by notable swings and key technical levels. Now trading in an uptrend and positioned above its 100-day moving average, the index faced substantial headwinds just two weeks ago. A robust selloff drove it below this critical indicator, signalling significant selling pressures.
However, amidst oversold RSI conditions, a strong support level materialised at 65416.30, catalysing a rally. This upward momentum faltered near the 69968.32 mark, establishing a resistance level leading to a downturn. The market correction deepened as selling pressures intensified, prompting a retracement to the 61.80% Fibonacci Retracement Golden Ratio.
A resurgence of bullish momentum emerged from this key level, propelling the index past the 69968.32 resistance. Should this upside momentum persist, investors may look towards breaching the 70720.91 level, a high point from December 2023. Conversely, the 69968.32 mark could serve as a downside point of interest should sentiment shift towards downside momentum.
Summary
The JSE Top 40 Index reflects resilience amid recent fluctuations, rebounding by 3% last week and gaining 1.50% week-to-date. Attention shifts to pivotal U.S. events, including the Federal Reserve’s Interest Rate Decision. Technical analysis highlights key levels, with the index poised to test the 69968.32 level or potentially breach the 70720.91 mark.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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