KSE-100 Index: Formation Confirms Top As 200-DMA Creates Resistance; Indicators Generate Sell Signal

The Keystone for September 06, 2010

First support 9,627 points, second support 9,550 points; First resistance 9,772 points, second resistance 9,850 points

The index opened marginally negative and after touching its day's high, took to a steady downtrend to close in the red. Volumes declined by 14.38% and stood at 37.52 mln. The index's 200-DMA has now confirmed its status as a critical resistance level for the index. As a result the index registered a lower high and a lower low to close in the red, thus adding credence to Thursday's candlestick which was a signal of a top.

The Stochastic Oscillator has now reversed its trend and has generated a sell signal after becoming overbought, while the RSI has started to show a gradual weakness. On the weekly chart the 50-week moving average (currently at 9,775 points) continues to create resistance for the index.

The first support is at 9,627 points and the second support is at 9,550 points. The first resistance is at 9,772 points and the second resistance is at 9,850 points