KSE-100 Index: 200-DMA Creates Strong Resistance As Index Remains Under Pressure

The Keystone for September 02, 2010

First support 9,665 points, second support 9,587 points; First resistance 9,791 points, second resistance 9,857 points

Analysis and Overview:

The index opened on a negative note and remained under pressure throughout the day to close in the red. Volumes declined by 36.01% and stood at 52.25 mln. The index's 200-DMA created strong resistance which caused the index to open and subsequently remain in the red throughout the day. This suggests that the short-term recovery is nearing completion and any upside should be capitalized upon to sell.

The Stochastic Oscillator continues to maintain its uptrend and is rapidly approaching the overbought region, while the RSI leveled off. Moreover, the MACD maintains its sell signal, while 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 500-DMA from above.

The first support is at 9,665 points and the second support is at 9,587 points. The first resistance is at 9,791 points and the second resistance is at 9,857 points.