KSE-100 Index: Experiencing Congestion Around Critical Resistance At 10,260 Points

The Keystone for July 20, 2010

First support 10,138 points, second support 10,068 points; First resistance 10,269 points, second resistance 10,340 points

The index opened positive and remained range-bound throughout the day to close marginally above the open. Volumes increased by 21.46% and stood at 67.79 mln. The index is facing strong resistance at 10,260 points and the formation created by it is a "Shooting Star" which is indicative of a top.

The Stochastic Oscillator on the daily chart maintains its sell signal, which makes the formation a bearish divergence. On the weekly chart the Stochastic Oscillator is starting to stall and is on the verge of generating a sell signal in the overbought region. Moreover the RSI continues to hover around its resistance trendline (blue line, lower portion) and is just below the overbought region.

Taking the above factors into consideration, upside seems limited. Hence any upside should be capitalized upon to sell.

The first support is at 10,138 points and the second support is at 10,068 points. The first resistance is at 10,269 points and the second resistance is at 10,340 poi