The index continues the downside correction triggered after recording the top at 23107 and as seen on the daily chart above, the 38.2% correction stopped the downside move to push the index higher towards the channel’s resistance.
The index reversed normally after reaching the resistance and currently faces critical support levels of which is the support of the ascending minor channel at 20620. Assessing the index over daily and four-hour basis, we can see a bearish formation on the secondary image with the neckline at 20850, where breaching it will drive the index to breach 20620 targeting lower areas mainly around 18660. The downside move will be very volatile facing the 100 Days MA which is adding strength to the aforesaid support at 20620, alongside oversold signals on Stochastic, yet the expected short term trend is to the downside targeting 20620 then 20350, which is expected to push the index to resume the downside move to test the support at 18660. While on the other hand, breaching 21920 can fail the bearish corrective scenario and drive the index higher to settle for 38.2% correction reached.
By: Yasir Mubarak
Senior Technical Analyst