Dubai Financial Market in Correction Phase


Dubai Financial Market Index closed the previous session at 2,344.76. The index could correct further if it moves below 2,265. However, the index held for a while above 2,265, before resuming its upward journey. On June 03, 2013, it ended in a small body candlestick formation with an upper shadow, indicating profit booking at higher levels. In addition, daily RSI is displaying negative divergence; this suggests it could continue to decline in the near term.

On Monday, the index failed to cross the previous session’s high and ended in a bearish candlestick formation. Going forward, if it fails to hold above 2,324 (20-day EMA), the index could correct to 2,290 and 2,200. Conversely, it may face resistance at 2,410 and 2,470 in the near term.

Medium- and long-term investors can stay in the market as long as the index closes above 1,950.

Emaar Properties ended the day at AED5.600. As evident from the charts, the stock had been on a continuous uptrend, as defined by the pattern of higher peaks and troughs. However, the trend seems to be reversing; this is evident from the fact that the stock broke its 20-day EMA and closed below the previous swing low in a bearish candlestick formation. On the daily charts, RSI displayed negative divergence; subsequently, the stock corrected. If the stock closes below AED5.560, it could correct to AED5.450 and AED5.300.
The stock looks like entering the bearish territory, at least for the short term. If it drops below the support level of AED5.560, the stock can correct to AED5.450 and AED5.300.

Dubai Islamic Bank closed the previous day at AED3.410. The stock peaked at around AED3.660. Since then, it has been facing resistance there. On Monday, it failed to cross the previous session’s high and ended in a small bearish candlestick formation. Daily MACD line is below the signal line; this suggests the stock could continue to correct in the near term if it trades below AED3.350. Daily RSI is declining after testing overbought territory, reaffirming this projection. If the stock trades below AED3.350, it could fall to AED3.250 and AED3.170. The short outlook for the ssock is bearish.