Over four-hour basis we can see a rising wedge formation which has influenced trading recently, where the index beached the support yesterday after a successful retest to the previously breached support at 10580 which turned into resistance.
The index started a downside wave which was accelerated by a new bearish double top pattern with the neckline at 10475, where the index reached its targets and reversed higher in correction due to the negativity on momentum indicators. The upside move might take the index to 38.2% at 10405 correction for the last descend from 10661, and might extend to 50% correction at 10455 which resides with the 100 MA which will be the ceiling for the short term movement.This upside correction will be followed by a downside affected by the rising wedge. The proposed rise and the reversal lower targeting 10300 completes the formation of a third bearish pattern which will further pressure the index lower as breaching 10300 will take the index towards 1000. In general the trading over short term basis is to the downside though following the upside correction mentioned; though breaching the resistance area among 10475 10500 weakens the proposed bearishness and might drive the index higher towards 10600 – 10650.
By: Yasir Mubarak
Senior Technical Analyst