After the index departed the ascending channel seen over daily basis, the index carried many attempts to retest the beached support within an upside wave structured by the minor ascending channel shown below.
The index struggled to surpass the recorded top around 6350.00 and stabilizing above it, to return and reverse lower facing the support for the minor ascending channel. The index found strong support from the 100 Days MA in addition to positive sings on Stochastic which signals possible upside movement over intraday basis to correct some of the downside movement which started from the recorded top around 6385, where the correction might not even reach 6190.00 and it might extend towards 6265.00 followed by a bearish reversal to attack the support for the minor ascending channel at 6070.00 which we believe represents the neckline for a bearish pattern shown above. We see that this pattern might pressure the index into resuming the downside correction which started with the breach of the main ascending channel late May. The first target resides at 5700.00 -23.6% correction of the entire upside rally that started from 3587.00 towards 6350.00. In general, we expect a downside move over short term basis supported by the bearish formation, while taking into consideration that the breach of 6440.00 and stabilizing above it will carry the index higher again to settle for 23.6% correction which was reached twice earlier, on May 06 and on May 25.
By: Yasir Mubarak
Senior Technical Analyst