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Last week the Dubai Financial Market General Index (DFMGI) jumped 52.04 or 1.5 per cent to close at 3,524.42. Volume reached a three-week high, while 24 issues advanced and 11 declined.

Strength returned to the DFMGI last week following a two-week retracement, as there was a breakout above the short-term two-week downtrend line, the prior week's high was exceeded, and the week closed positive and above the prior week's high. The high for the week was 3,532.17. Upward momentum started strong on Sunday as the index broke above the trend line, but noticeably diminished during the remainder of the week. Therefore, before the index attempts to break out above the most recent peak of 3,561.91 a minor pullback may be seen.

The more critical price level to break above is the 2016 peak at 3,604.70. If that occurs a trend continuation signal will be generated for the seven-month uptrend that started of the January low. Subsequent targets would then include 3,740 to 3,762, followed by 3,913 to 3,985, and then the 4,234 price area.

Support is at last week's low of 3,472.38. The DFMGI needs to stay above that price level if it is to have a chance of exceeding the recent peak in the near future. If it falls below the two-week low of 3,430.15 then the 200-day exponential moving average (ema) at 3,403.80 and down to 3,360 will be the next key support zone.

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Publication:Pakistan & Gulf Economist
Date:Aug 21, 2016
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