KSE-100 Index: Formation Suggests Peak; Indicators Stalling In The Overbought Region

The Keystone for July 13, 2010

First support 9,930 points, second support 9,853 points; First resistance 10,038 points, second resistance 10,107 points

The index opened marginally positive and after touching its day's high, took to a corrective trend momentarily dipping in the red only to recover and close marginally in the green. Volumes declined by 37.03% and stood at 64.70 mln. The index has created a "Doji Star" formation which in an uptrend is indicative of a top. Moreover the index's 100-DMA created strong resistance thereby making it a strong resistance level.

The Stochastic Oscillator on the daily chart has leveled off in the overbought region and could potentially generate a sell signal. Moreover the RSI took resistance from its critical resistance trendline (blue trendline, lower portion).

The index's formation along with the indicators now turning bearish, upside seems capped. Hence any upside should be capitalized upon to sell.

The first support is at 9,930 points and the second support is at 9,853 points. The first resistance is at 10,038 points and the second resistance is at 10,107 points.