The Keystone: KSE-100 Index: Closing Below 200-DMA By A Wide Margin Suggests Further Downside Risk

The Keystone for June 11, 2010

First support 9,307 points, second support 9,188 points; First resistance 9,435 points, second resistance 9,484 points

Analysis and Overview:

The index opened marginally negative and after touching its day's high, took to a downtrend, to close well into the red and around its day's low. Volumes declined by 17.64% and stood at 100 mln. The index reacted from its resistance trendline in the process closing below the 200-DMA. This is bearish and is suggestive of further downside risk.

The Stochastic Oscillator on the daily chart maintains its sell signal, while the RSI on the daily chart has shown weakness. The 30-DMA has cut the 100-DMA from above, which has started to conform to a downtrend as well thus adding strength to the bearish view.

Since index has closed below the 200-DMA, it could likely test 8,684 points which was from where it started its rally towards 10,721 points. Minor support is placed at 9,164 points. Critical resistance stands at 9,620 points being the 200-DMA.

The first support is at 9,307 points and the second support is at 9,188 points. The first resistance is at 9,435 points and the second resistance is at 9,484 points.