The Saudi Benchmark Index Looking For A Bullish Start
Bijoy Thomas Varughese | Aug 24, 2016 07:19AM ET
The Tadawul All Share index is in a correction mode, since April 25, 2016. The index dropped 11.81% from April 25th till August 23rd. The volume traded is also getting lower. Technically, the index broke the lower trend line of the channel and crossed the Fib=50% point and now it’s trying for a hold in this level. Two times the index touched and bounced from the lower trend line but in the third time, the index broke and went below the Fib=50% level.
A symmetrical triangle pattern had formed on July 28th 2016 (Daily chart), which was clearly showing a bearish move on the index. MACD and Moving averages (50ema, 100ema and 200ema) still moving the index to the bearish territory and a rise from this level needs a big boost in volume. A move above the lower trend line of the channel and 50ema will give the index a comfort level for a bullish move. Testing and retesting the lower trend line is the next challenge.
On the upside, it could touch resistance at 6,191 and 6,385.82 and on the downside, it could find support at 6, 017 and 5,931.95. If the index moves down and once the golden ratio of Fib=61.8 %( 5,931.95), a bounce can be expected and that will be a level which the investors can be considered to enter into the market.
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