The FBM KLCI fell for a fifth consecutive week last week but a technical rebound was nevertheless seen at the second half of last week. The FBM KLCI opened last Monday 1.26 points higher at 1,615.58 and surged to the intra-week high of 1,616.04 within the first five minutes after opening, but the key index succumbed to strong selling pressure and ended the day 6.44 points lower at 1,607.88. It continued to fall on Tuesday to close 9.71 points lower at 1,598.17. However, a strong rebound was seen on Wednesday after the key index hit an intra-week low of 1,590.67 and closed 8.35 points higher at 1,606.52. The FBM KLCI was up 0.8 point on weak follow through buying to 1,607.32 on Thursday, and Friday saw an extended rebound which further lifted the key index to close 3.51 points higher at 1,610.83.
On the weekly chart, the FBM KLCI formed a black hammer candlestick, a bottom reversal candlestick pattern which indicates buying support emerging at the 1,590-point level, and the key index might reverse up or consolidate in this coming week with an immediate overhead resistance zone at 1,616 to 1,628, while the downside support is at 1,590, and a break of this critical support level might see the key index plunging lower with a target of 1,550.
On the daily chart, the FBM KLCI formed a white spinning-top candlestick which indicates indecision of market direction, but the bulls has a slight upper hand, and the key index might consolidate to move range-bound with an immediate overhead resistance at 1,613 and an immediate downside support at 1,606. A break of the overhead resistance will see the index moving higher to test the next overhead resistance zone of 1,616 to 1,628, while a break of the support at 1,606 will likely see it sliding back to test the psychological support of 1,600.
Weekly MACD and its histogram continued to slide lower, indicating a further loss in the weekly momentum. Daily MACD, however, has turned upward, and its histogram also further contracted upward, indicating a reduction in the daily bearish downward momentum. Nonetheless, as MACD is still below the signal-line, the current improvement could well be just a technical rebound in a bear market. Weekly RSI (14) was marginally lower at 46 compared with previous week's reading of 46.9, indicating the weekly relative strength is still in the mildly bearish zone. Daily RSI (14), however, rose to 33.1 from 29, indicating the daily relative strength of the key index has moved out of the very bearish state to the bearish zone. Weekly Stochastic slid lower to 28.2 from 38.8, indicating the weekly market strength continues to weaken and the down cycle is still intact. Daily Stochastic, nevertheless, continued to climb higher to 31.9 from 19.9, breaking above the 20-level, indicating an improvement in the daily market strength and a continuation of the daily up cycle. Readings from the weekly indicators showed that the FBM KLCI is current still weak and bearish, while the daily indicators showed that the key index is undergoing a technical rebound.
The overall trend of the FBM KLCI still remained down. However, for the immediate short term, the key index has closed above the 5-day SMA for the last two sessions, indicating a reversal in the very short term trend is in the forming. In order to confirm the reversal of the immediate short term trend, the FBM KLCI will have to close above the 10-day SMA which is currently at 1,613; but for the FBM KLCI to reverse to current bearish downtrend, it will have to move above the 30-day SMA which is currently at 1,642, or the 61.8% Fibonacci retracement level at 1,645 measuring from the pivot high of 1,679 to the pivot low of 1,590.
Last Friday, the Dow rose a marginal +3.76 points or +0.03% to close at 13,025.58. This week, the FBM KLCI is likely to trade within a range of 1,570 to 1,641, and today, the FBM KLCI is likely to trade within a range of 1,600 to 1,620.
This week's expected range: 1570 – 1641
Today’s expected range: 1600 – 1620
Resistance: 1614, 1617, 1620
Support: 1600, 1603, 1607