KASB Securities Limited and Economics Research- The Keystone – Equities
Karachi, March 06, 2013 (PPI-OT): KSE-100: Is a Head and Shoulder formation in the making?
Back to back sessions of correction accompanied by weakness in RSI hints at a test of support area around 17,800.
According to KASB Securities the same lies in close proximity to the 21-DMA which continues to remain a pivotal support.
Importantly price behavior over past ten sessions appears to be forming a head and shoulder pattern which is yet to be completed, but holds a corrective bias.
Analysis and Overview:
A second day of correction post making a shooting-star formation reflects further possible downside. As highlighted earlier, current adjustment phase could extend towards 17,964 17,876. However, observing price performance of past ten sessions hints that a head and shoulder formation (right shoulder yet to be formed) is evolving with pivotal support at 17,800. The pivot level lies in close proximity to the 21-DMA and is likely to give a bounce-back to form the right shoulder. The adjustment phenomenon is also backed by weakness indicated by RSI. That being said, resistance continues to reside in between 18,200 – 18,260.