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Next support at 7,050 pts MSM30 index hits 6-year high

KUWAIT CITY, July 18: In our previous analysis on Muscat Securities Market (MSM30 Index) last April, we said that the index went bearish after crossing below its short-term moving average in mid-March and gave a liquidation signal for short-term investors below 7,020 points at that time. We also said that the support line near 6,780 points was preventing further drop and that a bullish reversal could be seen with some increase in volume. As expected, the index was halted by a support line at around 6,730 points, which is also the medium-term moving average, and could not break below, leaving the medium-term investors of the exchange in the market. 
The strong support prevented additional retreat and caused a reversal to the up-side, which was clearly seen at the end of May 2014. The trend turned bullish after crossing over its short-term moving average once again and gave a new buy signal for short-term investors at levels higher than 6,857 points at the beginning of June 2014. The index then continued rising and crossed over its 76.4% Fibonacci retracement at 6,967 points and is currently traded around a new high not seen since October 2008 after breaking above the 7,200 point level during the current week and closing at 7,203.87 points on 17 July 2014. 
If the support line at 7,200 points holds, a new high to the next resistance at 7,400 points could be reached within the short to medium term. However on the downside, the next support currently exist at 7,050 points and below that short-term investors need to start cashing out once the index retreats below 6,980 points. Meanwhile, medium-term and long-term investors can continue to hold their investments as long as the index is traded above 6,805 points and 6,460 points, respectively.
By KFH Research Limited

By: KFH Research Limited

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