JSE Top 40 Nears 94,250 Breakout as Rand Gains and Bulls Build Momentum
The JSE Top 40 Index (.JTOPI) is holding steady at 93,283 just shy of the recent high of 93,663 as the rand strengthens against...
Quick overview
- The JSE Top 40 Index is stable at 93,283, close to its recent high, supported by a strengthening rand against a weaker US dollar.
- The US dollar's decline is attributed to disappointing job data and uncertainty surrounding Federal Reserve leadership changes.
- South Africa's trade negotiations with the US are critical, with a looming 30% tariff on exports influencing market sentiment.
- Technical indicators suggest the JSE Top 40 is in a bullish consolidation phase, with potential for a breakout above key resistance levels.
The JSE Top 40 Index (.JTOPI) is holding steady at 93,283 just shy of the recent high of 93,663 as the rand strengthens against a softer US dollar. The rand rose after the US dollar slipped 0.3% against a basket of currencies after weaker than expected July jobs data cast doubt on the Fed’s near term rate plans.
The dollar also weakened after President Donald Trump said he would soon name a short term replacement for Federal Reserve Governor Adriana Kugler and announce his pick for the next Fed chair, uncertainty that’s reducing demand for the greenback.
ETM Analytics noted, “The USD is losing its exceptionalism and is steadily finding itself on the defensive, allowing other currencies to make up lost ground.”
Tariffs Could Shift Market Mood
South Africa’s trade talks with the US remain a key driver for the market. The country faces a 30% tariff on exports to the US, the highest in Sub-Saharan Africa. As the Washington deadline for tariff decisions approaches, traders are watching for any breakthrough.
Bond markets are in a cautious holding pattern. The 2035 bond yield ticked up 0.5 basis points to 9.68% no panic selling. If a better trade deal is reached it could boost investor confidence and provide more upside for the JSE.
JSE Top 40 Technicals Point to Breakout
From a technical perspective the JSE Top 40 is consolidating in a bullish continuation pattern. After rebounding from the early August low of 89,265 the index has been supported by the 50 period SMA at 91,448 and the 0.382 Fibonacci retracement at 91,983 both key buying zones.
The 4 hour chart is suggesting consolidation between the 0.236 retracement at 92,625 and resistance at 93,663 before a potential breakout. The RSI at 68 is strong buying pressure without overbought conditions, the MACD histogram is widening positively.
Above 93,663 and 94,255 is possible, 94,781 next. Below 92,625 and 91,983 or the 50-SMA. For short term setups a high volume breakout above 93,663 is a good risk reward to 94,255 and then more upside into Q4.
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