Elixir Securities Limited – Elixir Grid

Karachi, July 16, 2018 (PPI-OT): KSE100 – Still Holding the Trend-Line

A breach of the key supports at 40,100/ 40,000 levels in last week encouraged further fund liquidation of long positions as the benchmark KSE 100 Index extended its decline towards 100% Fib extension of 44,333 to 40,898 from 42,136 at 38,701 level. Although, we witnessed a minor penetration below this level with Index setting an intraday low of 38,561 on last Tuesday, however it found solid support around this area that helped it to form a hammer candlestick pattern on daily chart while momentum indicators show obvious oversold signs. That reversal pattern led to a recovery in the ensuing days as the shorts rushed to exit their positions and the bulls re-emerged in numbers to take the Index above 40,100 cluster support again.

As a result, the weekly data portrays an improved and exciting picture now. A strong rebound has not only marked strong downside rejection but it also printed a long lower shadow hammer candlestick pattern on the weekly time frame as well and thus closed the week above the key support at 40,100 level which keeps the bullish correctional wave and outlook intact for this week.

On upside, break of immediate resistances at 40,372/435 would unlock further upside to the levels of 40,755/803. Ability to hold above this area would be a sign of continuation of bulls towards 41,447 mark (50% Fib of 44,333/38,561 large descend) while a break would open doors for a move higher towards 42,200 level.