Last week the Kuwait Stock Exchange (KSE) was up 5.4% to close at 6,435.74, while volume spiked to the highest level since June 2013. This is the thirteenth consecutive week of gains and last week’s rise put the index above its 200-week exponential moving average (ema) for the first time since late-October 2014. Since hitting a low of 4,911.5 in January 2016 the KSE has risen 31.0%, while year-to-date it’s up 12.0%.
For the intermediate-term this is all very positive. However, such rapid appreciation is not sustainable for too long. Essentially the KSE has gone parabolic on a daily basis reaching very overbought levels (97.97) on the 14-day Relative Strength Index (RSI) momentum oscillator, as well as on the weekly RSI (90.60). It is fast approaching the next key potential resistance area that needs to be watched.
Last week’s high was 6,437.68, which is getting close to resistance of the long-term downtrend line and resistance represented by at least two prior peaks, one in 2011 and the other in 2012. That zone ends around 6,523 and is followed by the 50% retracement level at 6,681.6. The 50% retracement comes from the measurement of the full downtrend off the 2013 high.
If exceeded, the KSE will next be heading towards a resistance zone starting from around 6,895.57, a swing low from June 2014, to around 7,132. Within that range is the 61.8% Fibonacci retracement at
It’s interesting to note that the last significant rally in the KSE started back in November 2011 and saw the index advance 50.4% in 29 weeks. The current advance, if we start from the January 2016 low has already gone on for 53 weeks. It matches the percentage rise from 2012 once it reaches 7,385. (www.marketstoday.net/en/)