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Trading JSE Top 40 Index: Overbought & Weakening

  • Writer: Lester Davids
    Lester Davids
  • Nov 2
  • 2 min read

Research Notes November 2025 > https://www.unum.capital/post/rnov2025

Trade Local & Global Financial Markets with Unum Capital.

To get started, email tradingdesk@unum.co.za


The medium term bullish momentum, which had been in place for several months, has started to slow, with the index having traded in a sideways range for just under a month. This development is in line with our research on 06 October where we presented 4 charts that highlighted a reward-to-risk that was starting to become unappealing on a medium term basis.


Further to the above:


  • The index is trading in a relative tight consolidation range where resistance is 104,000 and support is 100,900.


  • The candle structure is showing signs of deterioration, reflecting both buyers weakening and sellers taking temporary control.


  • The 8-day and 21-day moving averages have lost upward momentum and are now trading in a sideways range with potential to starting rolling over (downward).


  • While the price continues to trading above it's rising 8-week EMA, this levels is vulnerable to being breached.


  • Should the 8-week EMA be lost, the rising 75-day and 21-week EMA is likely to provide medium term support, which can also be viewed as a buy re-entry range.


  • A breach of the current support zone opens up 96,400 to 97,700 as a downside target zone.


  • An alternative (bullish) scenario, would be the index taking out and holding above 103650.


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Previous Post (06 October): JSE Top 40 Index: Running +45% & 4 Charts To Assess The Current Reward-to-Risk


(1) The index trades 19% above it's 200-day SMA. Recent peaks occurred between 17% and 19%.

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(2) The index trades 41% above it's 200-week SMA. Furthest distance from the 200-week since April 2015.

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(3) Monthly chart - trading outside of the upper boundary of a multi-year channel.

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(4) Monthly Time Frame: 14-Month RSI at 81 (highest since 2008). This points to high demand however, also suggests the index nearing/at overbought conditions.

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Note: The index is HIGHER by 45% from our note on Sunday 06 April (Volatility Equals Opportunity).

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Lester Davids

Senior Investment Analyst: Unum Capital



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