KSE-100 Index: Formation Suggests Further Downside Risk As Index Closes At A New Low

The Keystone for August 31, 2010

First support 9,440 points, second support 9,354 points; First resistance 9,578 points, second resistance 9,639 points

The index opened marginally positive and after touching its day's high, took to a steady downtrend only to close in the red. Volumes increased marginally by 3.50% and stood at 36.64 mln. The index has formed an Engulfing Bearish formation while also registering a new low on closing basis. This is bearish and suggests further downside risk.

The Stochastic Oscillator on the daily chart has become oversold though in a failure swing. However the RSI has once again started to show weakness and the MACD maintains its sell signal. Also the 30-DMA, 50-DMA and 100-DMA maintain their respective downtrends, with the likelihood of a crossover building up with each passing day. This would further add credence to the bearish view.

The first support is at 9,440 points and the second support is at 9,354 points. The first resistance is at 9,578 points and the second resistance is at 9,639 points.