In our last analysis back in September 2014 on the Dubai Financial Market General Index known as DFM Index, we said that the index gave the buy signal for short-term investor on the third week of July 2014 (at around 4,670 points) and went up further, reaching its highest level since 18 May 2014 when it closed at 5,120.75 points on 4 September.
At that time, technical indicators were still bullish and further increases were still expected towards the year high of 5,406 points once again in the short-to medium term period. However, some profit booking followed our last analysis having the index move almost parallel to its short-term moving average line for five consecutive weeks.
This week saw a big drop and a long black candle stick was printed. The bearish trend triggered the cash out signal for short-term investors when dropped below 4,900 points (cash out signal for short-term investors on 4 September was given at 4,817 points). This provided a gain opportunity of about 230 points for our analysis followers of the short-term.
Technical indicators are still pointing south, while the DFM index dropped below its current support line at 4,380 points on 16 October and closed below medium-term moving average. If the down trend continued, medium-term investors needs to cash out if still in the market, while they can re-build their positions if the index rose again to higher than the 4,380 points resistant.
Only a new wave of buying and increase in volatility will be sufficient to take the market index higher again toward its current resistant at the 76.4% Fibonacci retracement level which currently lies at 4,500 points. While above that, short-term investors can start considering buying again at levels higher than 4,800 points or before, depending on the short-term moving average line at that time. Long-term investors cashing out level is still far away and currently below 3,150 points