The Keystone: KSE-100 Index: Recovery To Continue As Levels Sustain Above Key Moving Averages

The Keystone for July 09, 2010

First support 9,798 points, second support 9,711 points; First resistance 9,923 points, second resistance 9,983 points

The index opened positive and after touching its day's high took to a corrective trend momentarily dipping in the red only to recover and close in the green. Volumes improved by 54.18% and stood at 77.94 mln. The index managed to sustain above the 50-DMA and 200-DMA however closed just shy of its critical resistance at 9,865 points. The next critical resistance stands at 9,971 points around which lies the 100-DMA.

The Stochastic Oscillator on the daily chart maintains its uptrend as well as its buy signal, while the RSI on the daily chart too has shown improvement however is approaching its critical resistance trendline (blue trendline, lower portion).

The alarming thing is that the index's formation could potentially be one of distribution as the shallow body was created with higher volumes. For now the recovery phase is likely to continue.

The first support is at 9,798 points and the second support is at 9,711 points. The first resistance is at 9,923 points and the second resistance is at 9,983 points.