KSE-100 Index: Formation Serves As An Adjustment In The Overall Downtrend

The Keystone for August 27, 2010

First support 9,510 points, second support 9,421 points; First resistance 9,647 points, second resistance 9,689 points

Analysis and Overview:

The index opened marginally positive and after initially dipping in the red, took to a steady uptrend only to form a double-top, but managed to close in the green. Volumes increased by 37.99% and stood at 63.45 mln. The index’s formation serves as a breather and an adjustment as it had been closing in the red for the previous three sessions. As it stands, the trend remains bearish as the 30-DMA and 100-DMA have taken to their respective downtrends and in the near term could cut the 30-DMA from above.

The Stochastic Oscillator on the daily chart maintains its downtrend as well as its sell signal, while the RSI too maintains its weakness and the MACD maintains its sell signal. Also the Bollinger Bands have now conformed to a downtrend, thus confirming the view that the trend has turned bearish.

The first support is at 9,510 points and the second support is at 9,421 points. The first resistance is at 9,647 points and the second resistance is at 9,689 points