Dubai: Last week the Dubai Financial Market General Index (DFMGI) advanced by 60.12 or 1.82 per cent to close at 3,371.22. As there were only two trading days due to the holiday, volume was low. Most issues participated in the rally, with 29 advancing and only six declining.
For the fifth time over the past couple of months a short-term rally found resistance in the price zone from 3,373 to 3,378. It includes resistance of the 200-day exponential moving average (ema), which is now at 3,377. The high last week was 3,375.69.
The DFMGI has been building up energy over the past nine weeks as it has remained within a relatively tight range as best seen in the weekly chart. This means that when the index breaks out of the range, either up or down, it has a good chance to take off with strong momentum. There have been a few false upside breakouts over the past five weeks or so. Therefore, an upside breakout should be clear and decisive, and close visibly above the prior highs, to provide confidence that it can keep going.
The key price level to watch is the 3,378 high of the price range. A decisive rally above that price will trigger an upside breakout, thereafter confirmed on a daily close above that level. That would also trigger a move above the 200-day ema, for the first time since May 1st, a further bullish sign. Minor resistance is then around 3,421. Subsequently, the 10-week high of 3,495.25 begins a significant price zone up to the 2016 high of 3,604.70.
