Wednesday, October 13, 2010

Tehran Price Index (TEPIX) Technical Analysis (تحلیل تکنیکی شاخص كل بورس اوراق بهادار تهران )

Tehran price index(TEPIX) technical analysis chart:
I've been asked to give my analysis on Tehran price index(TEPIX)(شاخص كل).
As you see in the chart above TEPIX has enjoyed a strong rally (+136% from Feb 2009), but from September 2010 to October 7th it has moved side way. At this point I'm not sure if this is a flat top formation or a consolidation phase before next leg higher. Base on my analysis 167888 support level, must not get violated if Tehran price index wants to rally higher.

Since October 9th Tehran price index starts to move lower, that made many Iranian investors nervous. This is despite the fact that majority of exchanges all over the globe has moved higher.

Mishandling the economy by president Ahmadinejad has caused extreme fluctuation in currency market. Value of Iranian-Rial has fallen sharply against the U.S. dollar and Euro.
In recent weeks ordinary Iranian rushed to banks to exchange their national currency with the U.S. dollar. Situation got so bad that Iranian Central Bank announced that they stopped selling Euro and U.S. dollar.

If you follow the Forex market you should know that the U.S. dollar has fallen sharply against Japanese yen, Euro, Australian dollar...
The oil sector, makes the majority of Iranian GDP, therefore you should expect when the value of commodities increase the Iranian Rial like other commodity based currencies moves higher, but due to lack of confidence to Ahmadinejad economic policies, Rial has experienced sharp sell-off. I think the unrest in currency market is behind the recent Iranian stock market sell-off.

From 2001 to 2009, Tehran Price Index(شاخص كل) has moved in a triangle formation which from technical point of view is very bullish (positive). TEPIX hit the upper leg of the triangle three times(see the chart red arrows) and finally it broke out in a parabolic move. This parabolic move is actually a very defined uptrend channel(see the chart black parallel channel ). As long as TEPIX would not violate the channel it would have potential to rally, therefore in my opinion there is no need to panic. I forecast at least 6.22% drop to 16788 in comming days. Pay attention to 16788 as the first line of defense; if it fails to hold Tehran Price Index will free fall to 14100 level. In spring of 2010 TEPIX stuck in 14100 area for many weeks, big financial institutions did not let it tank beneath the 14100, therefore I expect banks to jump back and start to buy again.

Please note in the case that 14100 fails to hold the upper leg of triangle (see chart in green line) could act as support. Base on technical if Tehran Price Index tanks below 15100 it's officially in a bear market. In the case 14100 does not hold things will get ugly.