KSE-100 Index: Sustained Closing Below The 200-DMA Suggests Correction To Continue

The Keystone for August 26, 2010

First support 9,478 points, second support 9,365 points; First resistance 9,631 points, second resistance 9,731 points

The index opened flat and after touching its day's high, took to a steady downtrend to close in the red. Volumes increased by 15.86% and stood at 45.98 mln. The index gave a sustained closing below the 200-DMA which suggests that downward pressure is likely to prevail on the index for now and that the index is likely to register a lower highs and a lower lows in each swing.

The Stochastic Oscillator on the daily chart maintains its downtrend as well as its sell signal, while the RSI too has started to show weakness. Also 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. On the weekly chart the Stochastic Oscillator maintains its downtrend while generating a sell signal and now the MACD too has conformed to a downtrend having reissued a sell signal.

The first support is at 9,478 points and the second support is at 9,365 points. The first resistance is at 9,631 points and the second resistance is at 9,713 points.