The JSE Top 40 Index (JSE: J200) is currently on a promising trajectory, poised for its third consecutive week in positive territory. With a notable gain of 1.48% week-to-date, this surge is primarily attributed to the robust performance of mining stocks, notably African Rainbow Minerals Ltd (JSE: ARI), leading the charge.
Driving this bullish momentum is the backdrop of growing risk sentiment, coupled with a weakening U.S. Dollar. The recent softening of the Greenback follows concerning signals from the U.S. labour market, marked by an uptick in jobless claims—a key indicator of economic health. This development suggests a potential cooling of the labour market, igniting expectations of subdued inflationary pressures.
Consequently, market observers anticipate potential rate cuts in the U.S. this year, further bolstering the appeal of risk assets. As traders navigate these dynamics, the intersection of economic data and market sentiment will likely continue to shape the trajectory of the JSE Top 40 Index, offering both opportunities and challenges in the ever-evolving landscape of global finance.
Technical
The JSE Top 40 Index continues its bullish stride, riding atop an upward trend bolstered by several key indicators. Trading above the 100-day moving average, the index’s upward trajectory finds validation in both technical patterns and market sentiment. A distinctive ascending channel pattern, coupled with six consecutive days of gains, underscores the prevailing bullish momentum.
Notably, support materialized firmly at the 66462.83 level, coinciding with the channel’s lower boundary and oversold RSI conditions, highlighting a robust foundation amidst price fluctuations. Presently, the index finds itself near the upper boundary of the channel, propelled by sustained upward pressure.
Should this bullish momentum persist, attention will likely turn to a potential retest of the prior swing high at the 72623.52 level, a significant point of interest supported by the 23.60% Fibonacci Extension level. However, a resurgence in selling pressures could prompt a downturn, with the 100-day moving average poised to act as a crucial downside marker.
Summary
With mining stocks leading the charge, the JSE Top 40 Index continues its bullish trend, supported by technical indicators and market sentiment. Attention remains on key levels, with a potential upside towards the 72623.52 level, while the 100-day moving average acts as a vital downside marker amidst evolving market dynamics.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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