After the index recorded the top at 88.70 the index reversed lower structurally within the downside channel shown over daily basis above, where this channel is leading the index to breach the downside correctional levels so far surpassing the 38.2% and 50% correction. The index is now hovering around the support for the channel and we have pivotal horizontal support critical in defining the short and medium term trends at 80.00.
This level represents the neckline for a bearish pattern currently under formation, where we believe chances for completing this pattern are available, as trading is normal within the descending channel which might push the index higher towards 81.40 –the conjuncture between the descending channel’s resistance and 50% Fibonacci correction which turned into resistance now- after reaching this level we expect a bearish reversal due to the strength of the resistance which resides as well with the 200 Days MA.
Therefore, the index will bear again towards the 80.00 support to complete the bearish technical pattern where breaching it extends the downside move towards targets starting from 77.60 then 74.15. The bearishness remains valid as far as daily closing remains below 83.30.
By: Yasir Mubarak
Senior Technical Analyst