JSE Top 40 Closes at 94,189: Technical Outlook and Forecast for the Week Ahead
The JSE Top 40 closed higher on Friday, up 868 points (0.93%) to 94,189.50. The move was broad based across all the major sectors...
Quick overview
- The JSE Top 40 closed higher on Friday, gaining 868 points (0.93%) to reach 94,189.50, supported by improved liquidity and softer bond yields.
- The South African Reserve Bank reported an increase in net foreign reserves to $65.899 billion in August, contributing to a more stable financial outlook.
- Technical analysis indicates key resistance at 94,800, with potential for upward movement if this level is broken, while downside risks remain if sellers regain control.
- Political volatility within the coalition government may hinder further gains, leading to expectations of sideways trading in the week ahead.
The JSE Top 40 closed higher on Friday, up 868 points (0.93%) to 94,189.50. The move was broad based across all the major sectors and with improved liquidity and softer bond yields. Despite the political uncertainty, traders went into the weekend feeling cautiously optimistic.
The positive tone came after the South African Reserve Bank reported an increase in net foreign reserves to $65.899 billion in August, up from $65.143 billion in July and above expectations of $65.2 billion.
The stronger reserve position means more financial stability and the 2035 government bond yield eased 2 basis points to 9.625% which helped equities. The rand also recovered from earlier losses when the US dollar gained ground.
Technical Outlook: Key Resistance at 94,800
From a technical perspective the JSE Top 40 is coiled inside a descending triangle. Price is capped at resistance at 94,800 and higher lows at the 50-SMA (94,200) show buying interest. The 200-SMA at 87,818 is the longer term trend line.
Candlestick activity is showing market indecision. Recent spinning tops and Doji at resistance suggest hesitation and bearish engulfing clusters confirm supply. But downside momentum has been contained and bulls are defending the 93,000 support floor.
Momentum indicators are neutral. The RSI is at 51 and showing bullish divergence as price stabilises while momentum rises – a subtle sign of accumulation. Traders will be watching for a three white soldiers or three black crows to confirm the next move.
Week Ahead
For the week ahead 94,800 is the key level. A break above this zone, confirmed by a strong bullish engulfing candle and higher volume, could see a move to 95,630 and potentially 96,360. A failure to break resistance could see a retest of 93,000 if sellers regain control.With the reserve data and bond moves as a near term support, the overall bias is slightly positive.
But political volatility within the coalition government will still be a brake on upside momentum. Expect a week of sideways trading and any break of the triangle will be the trigger for the next big move.
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