On a technical perspective, AB Capital Securities said the index was tightly in between its six-month upward trend channel support and one-month downward trend channel resistance and sitting on top of its 35-day short-term moving average
as the MACD (moving average convergence-divergence) indicator nears the zero-line.
For 2014, the index faced a support at around 7,500 point which prevented further drop and caused a turn around to higher level once again, leaving the medium-term moving average untouched, and locating the index little below its short-term moving average
and higher than its previous support at 7,616 point.
"In our previous analysis on Abu Dhabi Securities Market (ADX) General Index two months ago, we said that a strong reversal lifted up the index in Mid-September to the same level of its short-term moving average near 3,694 point, after being knocked down due to the heavy selloff on regional instability at the end of August and beginning of September, taking it below its short-term moving average and slightly below the (76.4% level of Fibonacci retracements from 2,292 to 3,976) at 3,578 point," said an unattributed press release published on Zawya.
"ADX managed actually to continue its rise following our last analysis and succeeded in crossing over its short-term moving average on mid of September, hence it gave a buy signal once again for short-term investors at levels higher than 3,694 point.
"However, on the downside, if the support at 3,831 point could not hold, the index might touch its short-term moving average once gain (at 3,794 point) and give the liquidation sign for short-term investors below that level, if dropped below it.
There is 'technical momentum' behind the rally in the short term with the sighting of a positive 'golden cross' - this is when the short-term moving average
price rises above the long-term moving average price in heavy trading volume - a sign of a bull market to come.
I have obtained much better correlation using a medium-term moving average for RDYRs and short-term moving average
When a short-term moving average exceeds (falls below) the long-term moving average, a buy (sell) signal is considered to be generated.
However, when VMA rule is introduced with a one percent band, a buy (sell) signal is initiated only when the short-term moving average exceeds (falls below) the long-term moving average by at least one percent.
The market index in September was quick enough to reverse its bearish trend that it took in August due to heavy selling and rose back to above its 76.4 percent level and above its short-term moving average
on September 10th.
Currently, the near support seems to be holding, while the short-term moving average
, which lies at 7,380 point now, gives another support to the index and preventing it from falling below.