EGX30 Technical Analysis: The Tale of King Tut

EGX30 Technical Analysis: The Tale of King Tut and the Building of the Pyramids

In the grand tapestry of the Egyptian markets, the current technical readings for the EGX30 are akin to the hieroglyphs etched in the ancient walls of King Tut’s tomb:
• TRIX: Like the rising sun over the Nile, the TRIX indicator is ascending but remains below the zero line, hinting at a potential shift in momentum.
• TSI: The True Strength Index (TSI) is descending from its zenith, much like the setting sun, suggesting a weakening momentum.
• Price Action: For the past three days, the market has been in a state of consolidation, reminiscent of workers pausing in the construction of the great pyramids.
• Volume: Over the past five days, the volume has been red, aligning with the 9-day moving average, indicating a steady flow of selling pressure, akin to the relentless sands of the desert.
• RSI: The Relative Strength Index (RSI) stands in overbought territory, much like an overflowing Nile, suggesting the potential for a pullback.
• MACD: The Moving Average Convergence Divergence (MACD) is above the zero line but has experienced a bearish crossover, indicating potential downside risk, like a dark cloud over the kingdom.


Chart patterns reveal:
• Falling Wedge: A falling wedge pattern has emerged, with a downside target of 23,618, akin to the base of a newly discovered pyramid.
• Rising Wedge: Prior to this, a rising wedge had formed with an upside target of 33,047, symbolizing the peak of a majestic pyramid.
• Head and Shoulders: A head and shoulders pattern still lingers, with a downside target of 17,971, representing the shifting sands of time and potential danger ahead.
These mixed signals suggest caution, as the market may be poised for further consolidation or a potential pullback given the overbought RSI and bearish MACD cross, despite the rising TRIX indicating a potential momentum shift.

Recommendations: Building Strategies Like Pyramids
1. Caution with New Long Positions: Just as ancient builders would proceed cautiously with the construction of new pyramids, avoid initiating new long positions until clearer bullish signals emerge, given the bearish indicators such as the declining TSI, bearish MACD crossover, and overbought RSI.
2. Monitor Support Levels: Keep vigilant watch over the falling wedge target of 23,618 as a potential support level. Should the price approach this level, it may offer a buying opportunity if there are signs of reversal, much like discovering a hidden treasure.
3. Watch for Reversal Patterns: Look for potential reversal patterns near the current support levels. A bullish divergence in momentum indicators (like RSI or MACD) around these support levels could signal a buying opportunity, akin to deciphering ancient scripts revealing hidden truths.
4. Evaluate Existing Positions: For existing long positions, consider tightening stop-loss orders to protect against downside risk, especially given the head and shoulders pattern with a downside target of 17,971, much like fortifying the walls of a fortress against impending threats.
5. Volume Confirmation: Pay close attention to volume. A significant increase in buying volume could indicate a potential reversal, while continued selling volume matching or exceeding the 9-day moving average suggests ongoing bearish sentiment, similar to the ebb and flow of the Nile’s waters.
6. Short-Term Trading Opportunities: Traders may seek short-term opportunities to capitalize on potential price swings within the consolidation range, but should be prepared to act swiftly given the mixed signals, much like ancient warriors ready to seize the moment in battle.
In summary, the market is showing signs of potential downside risk. Exercise caution, focus on protecting capital, and wait for more definitive signals before making significant trading decisions, much like the strategic planning required in the construction of the timeless pyramids.