KSE-100 Index: Monday's Gap Creates Resistance; Critical Resistance Looming Overhead

The Keystone for August 05, 2010

First support 10,327 points, second support 10,276 points; First resistance 10,456 points, second resistance 10,532 points

Analysis and Overview:

The index opened on a positive note however after touching its day's high, took to a downtrend, momentarily dipping in the red, only to close flat. Volumes increased by 58.65% and stood at 72.55 mln. The index's formation is a shooting star which was created around Monday's gap. This is bearish. Moreover the index's critical resistance at 10,539 points looms overhead, which could clip gains.

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 after becoming overbought. Moreover the MACD too has conformed to a downtrend and has just about generated 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 10,327 points and the second support is at 10,276 points. The first resistance is at 10,456 points and the second resistance is at 10,532 points.