Keystone: KSE-100 Index: Formation Indicative Of A Top As 200-DMA Creates Resistance

The Keystone for September 03, 2010

First support 9,700 points, second support 9,628 points; First resistance 9,827 points, second resistance 9,892 points



The index opened on a negative note and after touching its day's high, took to a steady downtrend. It however recovered and managed to close in the green. Volumes declined by 16.14% and stood at 43.82 mln. The index's 200-DMA created strong resistance which led to the index creating a double-top. Moreover the formation created by the index is a 'Shooting Star' which in an uptrend is indicative of a top and suggests that the index could assume a downtrend in the near term.

The Stochastic Oscillator maintains its uptrend however it has now entered the overbought region, while the RSI has leveled off. Moreover, the 30-DMA, 50-DMA and 100-DMA maintain their respective downtrends, with a strong possibility that the 30-DMA and 100-DMA are likely to cut the 50-DMA from above.

The first support is at 9,700 points and the second support is at 9,628 points. The first resistance is at 9,827 points and the second resistance is at 9,892 points.