JSE Top 40 Index Poised for First Weekly Gain

The JSE Top 40 Index (JSE: J200) is making strides towards recovery, marking a significant 1.87% gain for the week, potentially signalling its first weekly ascent in 2024.  

This positive trajectory aligns with favourable inflation data, creating a conducive environment for the prospect of rate cuts. The allure of rate cuts lies in their ability to elevate equities, offering the promise of reduced interest expenses and more affordable financing for growth initiatives.  

Statistics South Africa’s report revealing back-to-back months of moderation in inflation adds weight to this sentiment, with the country’s annual inflation rate dipping to 5.1% in December, from 5.5% the month prior and outperforming the market consensus of 5.2%. Despite this, the Reserve Bank of South Africa maintains a cautious stance, keeping rates stable at 8.25% and highlighting lingering inflationary risks. This cautious outlook prompts contemplation on the potential limitations to the JSE Top 40 Index’s upward momentum in light of the central bank’s vigilance.   


The JSE Top 40 Index displayed a promising shift in sentiment as it recorded back-to-back days of gains, albeit concluding Thursday’s session on a lower note.  

This shift was accompanied by the index breaking free from a descending channel pattern that initially confined it to a downtrend. The ascent initiated from the 65262.11 level, marked by oversold RSI conditions, established a robust support level. A significant breakthrough above the 61.80% Fibonacci Retracement Golden Ratio signalled the dominance of bullish forces. 

Retesting the 67950.84 resistance level, formed during a mid-January selloff and aligning with the 100-day moving average, underlines the significance of the upside momentum. However, overbought RSI conditions at this level suggest a potential reversal. The 61.80% Golden Ratio could become a pivotal point of interest to the downside if a reversal unfolds. Conversely, a breakout above the resistance level could amplify bullish pressures, potentially paving the way for an advance toward the 69337.95 level. 


The JSE Top 40 Index forges ahead with a noteworthy 1.87% weekly gain, potentially marking its first ascent in 2024. Fuelled by favourable inflation data hinting at prospective rate cuts, equities find appeal. The robust support at 65262.11 and overbought RSI conditions at the 67950.84 resistance level prompt strategic considerations for traders, with the pivotal 61.80% Golden Ratio serving as a key downside point of interest. 

Sources: Statistics South Africa, South African Reserve Bank, Reuters, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst  

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