KSE-100 Index: Correction Likely To Continue As Resistance Band Clips Gains

The Keystone for August 06, 2010

First support 10,296 points, second support 10,236 points; First resistance 10,412 points, second resistance 10,475 points

The index opened on a positive note and after touching its day's high, took to a downtrend only to close in the red. Volumes declined by 23.17% and stood at 55.74 mln. The index took resistance from its resistance band, which is between 10,430 points and 10,539 points, in the process registering a lower high and a lower low. This makes the above mentioned levels a critical resistance for the index.

The Stochastic Oscillator on the daily chart maintains its downtrend as well as its sell signal, while the RSI has also generated a sell signal and has now conformed to a steady downtrend. Moreover the MACD too has conformed to a downtrend and has now confirmed a sell signal.

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

The first support is at 10,296 points and the second support is at 10,236 points. The first resistance is at 10,412 points and the second resistance is at 10,475 points.