Stocks on Bursa Malaysia closed higher yesterday on upbeat sentiment, driven by gains in regional bourses. The FBMKLCI gained 4.29 points or 0.24% to close at 1,823.15 after moving between 1,815.35 and 1,824.37 throughout the day. Gainers outpaced losers by 633 to 230, while 255 counters were unchanged. Total volume rose to 2.29 billion shares valued at RM1.85 billion from 1.88 billion shares valued at RM1.77 billion recorded last Friday.
Tracking the strong performance of Wall Street last Friday, the FBMKLCI opened higher with a gap up of 2.96 points at 1,821.82 but pulled back on profit-taking activity to hit the intra-day low of 1,815.35 forty five minutes after opening. The key index rebounded from the low and climbed higher to hit the intra-day high of 1,824.37 at noon. However, another round of profit-taking activity in the afternoon caused a pullback to close off high. Chart-wise, the FBMKLCI formed a white hanging-man candlestick, a potential top reversal candlestick pattern which indicates selling pressure has surfaced but the bulls managed to overcome it, and more data is required for confirmation. Immediate overhead resistance zone is at 1,824 to 1,830, while the downside support zone is at 1,815 to 1,810.
MACD continued to climb higher after making a golden-cross on Friday, indicating an increase in the bullish momentum. RSI (14) was higher at 50.5 from 48.7, indicating further improvement of the short term relative strength to the neutral zone from a mildly bearish state. Stochastic continued to rise to 61.7 from 50.9, indicating further strengthening of the index’s strength and continuation of the short term up cycle. Readings from the indicators showed that the FBMKLCI is gradually gaining strength and momentum for the short term, and hence, is likely to advance further on follow through momentum.
The technical picture of the FBMKLCI has tilted slightly to the positive side as compare with the very bearish scenario a week ago, in that the short term trend of the FBMKLCI has turned up as the key index has closed above the short term moving averages, particularly the 20-day simple moving average (SMA), and also closing above the long term 360-day SMA yesterday. Nonetheless, the medium and long term trend of the FBMKLCI is still down. In order for the FBMKLCI to reverse the downtrend, the key index must at least close above 1,831-point level, being the 50% Fibonacci retracement level for the range taken from the historical high of 1,896.23 to the recent low of 1,766.22, and to fully reverse the downtrend, the FBMKLCI will have to climb above the 120-day SMA which is currently at 1,861. Immediate overhead resistance zone is at 1,827 to 1,830 posted by the 30 and 300-day SMA.
Overnight, the Dow rose 12.53 points or 0.07% to close at 16,817.94. Today, the FBM KLCI is likely to trade within a range of 1,808 to 1,833.
This week's expected range: 1770 – 1848
Today’s expected range: 1808 – 1833
Resistance: 1826, 1829, 1833
Support: 1808, 1811, 1817
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