The index trading range has slowly contracted, or coiled itself, in the past three weeks, indicating a consolidation of the Sep-Oct rally. Therefore, look for the index to trade in the direction of a breakout. A close above 1,490 pts should nullify the weak candles in the past 3 weeks and see a continuation of the rebound. It will also see the violation of the 100-day MAV line. Resistance is expected at the 16 Aug-high of 1510, also where the 200-day MAV line is situated, followed by 1,530 pts, which is the gap of 5 Aug. A close below last week’s low of 1,466 pts - which is also just below yesterday’s candle - could see a return of selling. But weakness can only be confirmed by a close below the 3 Nov low of 1,450 pts. The next support is 1,430 pts, which is not too far from the 50-day MAV line. A violation of 1,430 pts will likely see the index testing the 1,400-pt psychological level, a 50% retracement of the Oct rally.
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