The Tadawul All Share Index (TASI) (Saudi Stock Exchange) hit a high of 7,234.51 two weeks ago thereby completing a 35.8% advance off the most recent swing low of 5,327.49 reached 10 weeks prior. That high follows a bullish breakout of a relatively large double bottom trend reversal pattern triggered three weeks ago as the index broke above 6,875.69 and closed above it on a daily basis. A 38.2% Fibonacci retracement of an internal long-term downtrend was completed at 7,091.50 following the breakout.
There are now signs that the uptrend is growing tired and is overdue for a retracement of some note.
The 14-day RSI has been overbought for a number of weeks and has now turned down below the 70 line. In addition, a potential small bearish head and shoulders top has formed on the daily chart. It’s a little easier to spot on the 60-minute chart, which can be seen below. This is a small pattern so far and is therefore being ignored in regards to downside targets.
Rather, potential support areas have been identified using Fibonacci ratio levels from the measurement of the eleven-week uptrend. However, the first area to watch for support is the breakout level of the double bottom around 6,875.69.
Retracement targets include:
-6,875.69 = double bottom breakout (resistance becomes support)
-6,498.40 = 38.2% Fibonacci retracement
-6,281.00 = 50% retracement
-6,055.97 = 61.8% Fibonacci retracement