July 02, 2023 (MLN): The following is an outlook for the KSE-100 index based on technical analysis (historical quantitative data).
KSE-100 Daily time-frame chart
KSE-100 Weekly time-frame chart
| Indicator | Value | Stance |
|---|---|---|
| Exponential Moving Average (10) | 40974 | Buy |
| Simple Moving Average (10) | 40879 | Buy |
| Exponential Moving Average (20) | 41112 | Buy |
| Simple Moving Average (20) | 41269 | Buy |
| Exponential Moving Average (30) | 41164 | Buy |
| Simple Moving Average (30) | 41289 | Buy |
| Exponential Moving Average (50) | 41156 | Buy |
| Simple Moving Average (50) | 41257 | Buy |
| Exponential Moving Average (100) | 41126 | Buy |
| Simple Moving Average (100) | 41058 | Buy |
| Exponential Moving Average (200) | 41403 | Buy |
| Relative Strength Index (14) | 54.15 | Neutral |
| Stochastic %K (14, 3, 3) | 78.92 | Sell |
In the short-term, technicals are giving a strong buy stance, however, it is worth noting that on longer time frames (weekly and above), it is still a sell.
Current range = 39,800 – 43,200.
This 43,200 level should be the upside target as it serves as a strong resistance and should be considered as such, unless the price starts to get acceptance above this level, which seems unlikely for now.
Base case
The bulls showed resilience in the final two trading sessions of FY23, effectively rescuing the fiscal yearly close of the KSE-100 index and successfully reclaiming the Volume Weighted Average Price (VWAP).
The positivity stemmed from the Government’s last-ditch effort to secure a stalled IMF tranche.
On Friday, the long-standing Staff Level Agreement (SLA) worth $3 billion was finally signed between the International Monetary Fund (IMF) and Pakistan, while the stock market is close.
The Eurobonds of the country depicted the excitement of investors following this news.
The country’s Eurobonds worth $0.5bn and $1bn appreciated by 13 cents and 16 cents, respectively.
Throughout the fiscal year 2023, KSE-100 remained in a tight range-bound environment amidst a challenging economic landscape and political uncertainty throughout the year.
The KSE100 has been trading within a narrow range for the past 12 months, with this range also being a major high-volume node (HVN).
From a technical perspective, the price action can be expected to transition from its current range-bound state and establish a trend.
This transition is anticipated due to the prolonged duration of the range and the probability of a breakout, which could result in a substantial expansion.
The fundamental factors stated above further support the expectation of increased price action in the underlying index.
Key levels to note are the major HVN at approximately 41,200 and the volume weighted average price (VWAP) at 41,000, both of which were regained in the last two trading sessions, showing strength from bulls.
Current range = 39,800 – 43,200, in case of a breakout (acceptance) above this range, the next point of control (POC) is around 45,000.
Technical terms used:
Moving average (MA): A calculation that takes the arithmetic mean of a given set of prices over a specific number of days in the past.
Exponential moving average (EMA): A weighted average that gives greater importance to the price of a stock in more recent days, making it an indicator that is more responsive to new information.
Volume weighted average price (VWAP): It is just a moving average but puts Volume into the calculation.
Point of control (POC): It is the price level at which the greatest number of contracts are traded during a given trading period.
Relative strength index (RSI): It compares a security’s strength on days when prices go up to its strength on days when prices go down.
High Volume Node (HVN): It refers to the price at which the largest amount of volume occurred.
Disclaimer: The opinions in this article are the author’s and do not necessarily represent the views of Mettis Link News (MLN).
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Posted on: 2023-07-02T10:51:10+05:00
