The JSE Top 40 Index (JSE: J200) has recently encountered a spate of challenges, recording back-to-back days of losses. Bearish pressures continued to weigh heavily on the index, culminating in a sharp decline of up to 2% in the latest trading session. Among the hardest hit were Woolworths Holdings Ltd and Tiger Brands Ltd, marking them as top losers for the week so far.
Today, all eyes are on the South African Reserve Bank’s interest rate decision, a pivotal event that could significantly influence market sentiment and the index’s direction. In addition, the U.S. Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred measure of inflation, is under intense scrutiny. This indicator is poised to impact U.S. monetary policy and, by extension, global markets.
Technical
The JSE Top 40 Index has been trading in an uptrend, above its 100-day moving average, reflecting bullish sentiment. Following a minor dip, support materialized at 66,462.83, where buyers outweighed sellers, driving the index higher.
However, the index faced significant resistance at the 73,915.71 level. Here, upside momentum weakened amid overbought Relative Strength Index (RSI) conditions, leading to a downturn. The index has so far retraced to the 38.20% Fibonacci Retracement level. If downside momentum continues, traders might focus on the 50% retracement level as a key area of interest. Conversely, should buyers re-emerge, the 73,915.71 resistance level could be tested again, indicating renewed bullish strength.
Summary
The JSE Top 40 Index’s trajectory hinges on upcoming economic events, with key technical levels at 66,462.83 and 73,915.71 in focus. Persistent bearish momentum might target the 50% Fibonacci level, while renewed buying could retest the upper resistance, reflecting dynamic market sentiment.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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