KSE-100 Index: Formation Suggests Short-Term Recovery Phase To Continue

The Keystone for June 04, 2010

First support 9,559 points, second support 9,493 points; First resistance 9,695 points, second resistance 9,765points

Analysis and Overview:

The index opened positive and after touching its day's low in the initial hour, reversed its trend and remained range-bound well into the positive territory. Volumes increased by 22.93% and stood at 140.61 mln. The index managed to sustain above the 20-DMA however the candlestick body was smaller compared to Tuesday's candlestick. This is a bit disconcerting considering the fact that volumes were higher.

The 30-DMA has cut the 50-DMA from above with the former likely to cut the 100-DMA from above. Incidentally the 100-DMA has started to conform to a downtrend as well. However, the Stochastic Oscillator on the daily chart maintains its buy signal but is now rapidly approaching the overbought region, while the RSI on the daily chart has shown improvement.

Hence the short-term follow-through is likely to continue for now.

The first support is at 9,559 points and the second support is at 9,493 points. The first resistance is at 9,695 points and the second resistance is at 9,765 points.