After the downside correction stopped at 38.2% Fibonacci correction which started following the breach of the medium term’s ascending channel. The index rushed in an attempt to return to the bullishness yet was restricted by the 100 Days MA alongside losing the bullish momentum which caused volatility around 23.6% correction while providing the formation of a bearish pattern seen on the secondary chart below.
The neckline for the patter resided at 5200 and the index carried one attempt at breaching it and did not set a daily closing below it. According to the mentioned above, we expect the index to continue the downside correctional move which was initiated from the recorded top at 5797 as the path is clear towards 38.2% correction at 4905 and then will provide further pressure targeting the previous bottom set last month at 4755 which is the neckline for a bigger bearish pattern. Therefore, we should observe the index when reaching to that level as breaching it takes the index lower towards 61.8% correction at 4350. Momentum indicators are pointing south supporting the bearishness; note that breaching 5415 and consolidating above it fails our downside expectations.
By: Yasir Mubarak
Senior Technical Analyst