ASI - Trying to breakout of a major resistance level at 6550 points

For many weeks the ASI was rising with very thin margins. From 6254 points on the 4th of July it has come upto 6522.10 at the close of today's trading. That is an increase of 268.10 points in 28 days. An average rise of 9.57 points per day. This is not an aggressive move at all. At this rate we may not see the ASI hitting above 7000 points this side of September 2016. But an up trend even with very shallow steep is positive as a strong move can happen fast as long as the trend is in tact.

200 Day Moving Average

One of the interesting things right now is the 200 day moving average which is positioning as a strong resistance along with some trend lines coming from 2015 and early 2016, confluencing around 6550 level.

6529 to 6600 has many resistance points

Helping the 200sma to support the index is the 61.8% fib retracement of the previous down trend. Therefore we can safely assume that the 6500 points area is the present support. But in order to push the bulls higher we need to see a strong rally, that we have not seen so far. Else this slow and boring trend will prevail, leading to an ugly collapse.

Weekly and Monthly Charts are very encouraging

As you may know that for many months in this blog I've been reminding the readers that we will see new highs that will erase the previous all time high levels. I have not given up hopes on that premise.
This is now getting confirmed through the weekly MACD as well. The bullish signal it gave for many weeks have been successfully held thus far.

I will be over joyed when the monthly MACD gives the buy signal. We can see the monthly bars as shortening on the histogram giving some hope of that reality.

RSI is the darling of the Sri Lankans

Technicians do not go by just one indicator or oscillator, but in Sri Lanka you could just trade with the RSI. If you had bought when the RSI was below 20 points, you could easily make money when it hit past 80 points. Even though the RSI is a handy tool to understand the positive or negative divergence of the sentiments, in the Sri Lankan context it has a little significance.

Conclusion

As the medium to long term indications are now turning out to be bullish, I expect this to happen in the short term too, hopefully at a faster speed than we see now.