The Microfinance index has gained almost 150% in the last year. The index went through a month-long correction and has started to gain from the last week or so.
Trend and Trend line
With this gain, the Microfinance index has bounced up from the lower trend line. This can be taken as a good signal of the continuation of the primary trend since the bounceback obeyed the trend direction.
Furthermore, the index seems to have broken out from a flag pattern. Generally, in a flag breakout, the vertical height of the flagpole is the minimum gain the index (or stock) will achieve from the point of breakout.
Six of the last seven candlesticks are bullish. This means that the index has gained for six days in the last seven trading days. Volume has revived after the breakout from the flag pattern, which is a good sign.
The candles are extensive and are formed fairly above each other, which is a signal of a strong bullish momentum. Furthermore, the last candle also formed a gap up from the previous candle, which shows bullish optimism.
Support and Resistance
The index has already bounced back from the support zone and is now nearing the resistance zone.
It will be interesting to see if the index breaks above the resistance zone. If it does so, it will be creating a new all-time high.
If the index does break above this zone, it may pullback to retest the supply zone before continuing with the trend.
RSI and MACD
The Relative Strength Indicator has reentered the intermediate bullish momentum zone (50 – 70) and is currently at 65.15.
Meanwhile, the MACD line is currently in the positive zone and has recently crossed above the signal line which is a bullish signal.