Elixir Securities Limited -Elixir Grid

Karachi, March 12, 2018 (PPI-OT): KSE100 – Stuck In a Range

The benchmark KSE 100 Index seems to have been stuck in a tight consolidation pattern with Index moving sideways post 38.2% correction of its recent bull run (38.2% retracement of 37,736/ 45,496 larger ascend). There was indeed a bit of follow-through in the buying momentum at the start of last week which ultimately failed ahead of the range resistance at 43,950/ 44,000 levels. A quick pullback, that left daily candle with long upper wick on Monday, not only marked strong upside rejection but also weakened the short-term structure dragging the Index down to the range supports at 43,000/ 42,850 levels. This has allowed the short-term oscillators to unwind from overbought levels, which means some momentum-based traders can begin to look for new buying opportunities once again.

Moving forward, ability to hold onto 42,850/ 42,685 supports maintains a bullish bias on weekly chart, however a downside break would turn attention to 42,606 and 42,366 (former lows) levels next. Breaching this support area would require focus on volumes to determine the sustainability of the down-trend. A persistent decline with expanded volumes would be a sign of further bearish correction targeting the next supports at 41,616 (50% Fib of 37,736/ 45,496 larger ascend) and 40,914 (100% Fibonacci extension of 45,496 to 42,366 from 44,044).

Conversely, if nearby supports keep the losses in check, the Index could bounce back towards 43,312/ 452 resistances. Sustained progression above this area would validate a move higher towards 43,950/44,200 levels again. We will look for extended targets on the break of this major resistance.