KSE-100 Index: Levels Stalling Around Critical Resistance; Pressure To Continue

The Keystone for July 23, 2010

First support 10,162 points, second support 10,083 points; First resistance 10,278 points, second resistance 10,339 points

Analysis and Overview:

The index opened flat and remained range-bound throughout the day to close marginally in the red. Volumes witnessed a sharp decline of 49% and stood at 60.22 mln. The index's formation is a spinning top while taking resistance from its critical resistance level of 10,260 points and despite breaching it intraday, the failed to sustain only to close in the red. Moreover the cluster of formations suggests that the index is topping out.

The Stochastic Oscillator on the daily chart has now generated a sell signal just below the overbought region. Moreover the RSI is also gradually starting to stall.

Taking the above factors into consideration, any upside should be capitalized upon to sell as the index is due for a short-term correction.

The first support is at 10,162 points and the second support is at 10,083 points. The first resistance is at 10,278 points and the second resistance is at 10,339 points.