Share prices on the Tehran Stock Exchange experienced slight increases for the second week in a row by the end of May 17th after U.S. withdrew from JCPOA. The TSE All-Share Index gained 1.4% as it ended the week at 95.103 on Wednesday’s trading session. Some of this positive performance by the TEDPIX has been driven by oil and petroleum sector as the oil prices hit fresh highs in global markets due to conflicts of the U.S. with Iran on its nuclear deal, therefor, leading the major sectors to close in green.
Studying the All-Share Index (TEDPIX) through Technical Analysis reveals valuable information on possible scenarios of the coming weeks in Tehran’s Stock Exchange which will be expressed in the following:
First, let’s have a flashback to early 2016, when the TEDPIX hit a major high around 81.500 from where started to decline in a sharply manner to stop at 72.000 zone. This supportive area helped the TEDPIX to regain some of its lost value and put the market in a neutral era.
These fluctuations started to form an ascending triangle on a weekly basis, as it’s demonstrated on the chart below, causing almost 82.000 level very tough to break above. Eventually the triangle candle stick pattern was completed by breaking up this zone where subsequently, a sharp rally was formed afterwards to high rocket the TEDPIX to almost 100K zone. A psychological and very tough resistive area overlapping the upper channel line as drawn on the chart.
Upon reaching the upper band of the bullish channel, TEDPIX witnessed a slight move back to retrace to almost 38.2% of its rally. This decline is still interpreted as a correction as it has retraced more in time than value, causing the indicators to gain momentum for another bullish move. From another perspective, the correctional move has formed an ABC retracement pattern, equivalent to 100% extension level, where a support of aforementioned bullish channel has overlapped as well.
All previously technical factors mentioned, convince us to assume the main bullish trend is still healthy and we are experiencing the correctional moves at this writing moment.
Based on above, some pivot points are derived to approve or decline this scenario. The closest and the most critical support is laid below the recent low at 92.700 where any sustainable penetration below it would lead to further losses towards 90.000 as the next station. On the flipside, the most crucial resistance is located at 97.500 to 98.000 range where the break above this zone and a maintaining above it is required for the TEDPIX to resume its main bullish move towards the next main target located at 106.000, the 161.8% level of Fibonacci Expansion from the previous high to low range.
To sum up, the expected trend for the coming weeks, we believe, is still up unless 90.000 level is broken down.