Elixir Securities Limited -Elixir Grid

Karachi, January 01, 2018 (PPI-OT): KSE100 – Challenging the Descending Channel Resistance

The benchmark KSE 100 Index extended its rise last week as it climbed towards 40,644 level intra-day after breaking above its daily 55 EMA at 40,240 ever since August 2017. The rising thrust however remained vulnerable to the descending channel resistance at 40,500/550 and settled slightly lower at 40,471 level. Moving forward, ability to hold onto 40,240 support could further push the Index to 40,900/ 41,500 levels. Nonetheless it would still be considered an upside correction and not the termination of medium-term bearish structure.

At this point, the daily studies of momentum indicators reveal that the RSI is testing the upper band while stochastic is showing grossly overbought readings thus suggesting exhaustion in buying pressure sooner or later. If so, a break below 40,240 support would turn attention to the next major supports at 39,545 (38.2% Fib of 37,767/ 40,644 ascend) and 39,205 (50% Fib of 37,767/ 40,644 ascend). Further down, a cut through here, would be a sign of further bearish correction to the levels of 38,250.