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AKD Securities Limited Equity Research – Daily Report (November 02, 2022)

Karachi, November 02, 2022 (PPI-OT): KSE-100: Bullish sentiment expected

Market View — Technical

The index opened on a positive note and remained bullish throughout the last trading session. The local bourse posted an intraday high of 569pts and concluded with a gain of 544pts to settle at 41,809pts. The volumes clocked in the last trading session were comparatively higher than the previous trading session.

The index is trading above 50-SMA (Simple Moving Average) on daily chart and rebounded from important trend line support. Among the Strength Indicators, RSI (Relative Strength Index) is trading in a neutral mark of 50.00. Daily Parabolic SAR (Stop and Reverse) is currently appearing above the current level of the Index.

The chart formation depicts that the index may find initial support near 41,600. A break below mentioned support can result into further weakness towards 41,200 and 41,000pts level. Alternatively, the index can face resistance near 42,200pts initially and then head towards 42,500 and 43,000 area. It is recommended to accumulate positions on weakness with risk defined below support zone.

GLOSSARY OF TERMS

Support: Support is the level at which the stock is likely to see increased interest from buyers. The buying support will prevent the stock from falling further.

Resistance: Resistance is the level at which the stock is likely to see increased interest from sellers. The selling pressure will prevent the stock from rising further.

RSI: The Relative Strength Index (RSI) is a momentum oscillator that ranges from 0 to 100. It compares the extent of the stock’s recent price movements by evaluating recent gains and losses. Stocks with RSI above 70 could be considered overbought, and below 30 could be considered oversold. Generally, if the RSI falls below 70, it is a bearish signal. Conversely, if the RSI of a stock rises above 30 it is considered bullish.

The RSI used is of 14 days.

Bollinger Bands: A Bollinger Band, developed by famous technical trader John Bollinger, is plotted two standard deviations away from a simple moving average. BB highly popular technical analysis technique. Many traders believe the closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

MACD: MACD shows the relationship between a longer period moving average and a short period Moving average of a stock’s price. Generally, the 26-day exponential moving average (EMA) and the 12-day EMA are used to calculate MACD.

EMA: Exponential moving average (EMA) is the weighted average of the prices of a given security where higher weights are given to recent data points. EMA is used to analyse the trend of a stock.

SMA: A simple moving average (SMA) is the average of the closing price of a security for a given period.

The parabolic SAR: is a technical indicator used to determine the price direction of an asset, as well as draw attention to when the price direction is changing. Sometimes known as the “stop and reversal system,” the parabolic SAR was developed by J. Welles Wilder Jr., creator of the relative strength index (RSI).

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