JSE Top 40 Strengthens Ahead of Interest Rate Test

The JSE Top 40 futures (JSE: J200) are cautiously climbing higher, mirroring the underlying index’s recent gains. This tentative optimism stems from a mix of global and domestic factors influencing the South African market sentiment. Today’s release of South African employment data for Q4 might shed light on the state of the labour market and potentially influence investor sentiment. 

The South African Reserve Bank’s interest rate decision on Wednesday is a key event for the market. An anticipated rate hike could dampen risk appetite but might also signal efforts to curb inflation. Globally, economic slowdown fears and geopolitical tensions create uncertainty, but some commodity prices remain elevated, potentially benefiting South African resource exporters within the JSE Top 40. 

Technical Analysis  

The 4-hour shows that the J200 futures are currently trading at R67,469.50, with a recent break above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). This bullish crossover suggests a potential shift in momentum. The RSI (61.50) slopes upwards but remains below the overbought territory (70.00). This suggests there’s potential for further upside moves before a short-term correction. 

The price action is attempting to climb above the 38.20% Fibonacci retracement level and the descending channel, a sign of potential buying pressure. The 50.00% Fibonacci retracement (R67,994.25) could be the next target if the bullish momentum persists. A break above the initial resistance on significant volume could confirm the bullish momentum, likely leaving the 61.80% Fibonacci retracement level (R68,637.74) as the next level of interest in the short term. 

However, the recent break of the 20-SMA (green line) below the 50-SMA (blue line) and 100-SMA (orange line) suggest the presence of bearish momentum. Therefore, a failure to sustain a break above the 38.20% Fibonacci retracement level would leave the possibility for a pullback towards the 23.60% Fibonacci retracement level (R66,554.57) firmly in play. A break below the initial support on significant volume could confirm the bearish momentum, likely leaving the four-month low of R65,267.58 within the bears’ reach in the short term. 


The current market sentiment leans towards cautious optimism. The recent price gains and positive technical indicators suggest a potential return of some buying pressure. However, global economic headwinds and the upcoming interest rate decision could trigger profit-taking or a reversal in sentiment. 

Sources: TradingView, Trading Economics, Reuters, MarketScreener. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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