KSE-100 Index: Closing Below 30-DMA And 200-DMA Suggests Further Downside Risk

The Keystone for July 07, 2010

First support 9,512 points, second support 9,426 points; First resistance 9,631 points, second resistance 9,704 points

Analysis and Overview:

The index opened flat and after touching its day's high, took to a steady downtrend however witnessed a modest recovery only to close in the red. Volumes improved and stood at just 29.78 mln. The index took resistance from its 200-DMA only to close below the 30-DMA. This is bearish and suggests further downside risk.

The Stochastic Oscillator on the daily chart maintains its sell signal, while the RSI on the daily chart has started to show weakness. Also, trend forecasting indicators have now turned bearish on the index with the MACD taking to a downtrend and on the verge of generating a sell signal.

With the index closing below its key moving averages and with the indicators generating sell signals, the trend has once again turned bearish.

The first support is at 9,512 points and the second support is at 9,426 points. The first resistance is at 9,631 points and the second resistance is at 9,704 points