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DFM index shows retrieval sign Technical indicators still positive

KUWAIT CITY, May 23: In our last analysis back in April on Dubai Financial Market General Index known as DFM Index, we said that the index saw a new increase in trading activity as investors went on buying stocks again at lower prices following a healthy correction to 4,000 points. Strong trading pushed the index above the resistance levels at 4,370 points and 4,690 points during the period between mid-March and mid-April 2014.
The index continued to record new highs, and reached a high not seen since August 2008 after breaking above the 5,000 point psychological level. It touched a high of 5,406.62 points on 14 May 2014 and could not break above it, forming an Evening Bearish Star, which is a clear reversal sign. From there, the index saw a strong correction to the down side towards its 76.4% level of Fibonacci retracement but was stopped by the support line at around 4,550 points.

The recent drop is still within normal limits following the strong overbought levels that the index has reached lately. Positive reversal signs started to print on the chart on the last trading day of this week with a close at 4,864.03 points. Moreover, technical indicators are still located in the positive area, with no clear negative trend yet.  We are still positive about the DFM as a new increase in trading could push the index up once again to its recent highs in the short to medium term. Investors can monitor the trend and continue to hold their stocks as long as the index is supported by the 4,550 points line. For medium and long term investors profit booking signals will only occur at levels lower than 3,610 points and 2,670 points, respectively.

By KFH Research Limited

By: KFH Research Limited

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