It was a lackluster day as far as the FBM KLCI was concerned and the broader market was no better. There were 493 decliners compared to 244 advancers. As there was no follow through buying after Monday’s 13.52-pt gain to confirm the “Morning Star”, we are still unsure if the index could continue to extend the current rally without a further pullback.
After creating the “Morning Star”, we would need the index to crack above the recent high of 1,479.6 pts to confirm the bullish reversal signal. If not, a dip below the recent low of 1,445.33 would increase the odds of the index falling further after it violated the steeper uptrend last Thursday. Hence, we would need the market to breach either one of these two levels in order to determine its immediate direction.
To see how market sentiment could have improved after Monday’s 13.52 pts of gains, we will analyze the market’s behavior over the last three sessions prior to yesterday. Last Thursday, the FBM KLCI closed lower by nearly 18 pts in an obviously bearish session. The next trading day, the index gapped down by 6.5 pts at the opening bell, but only lost 0.39 pts during the entire session.
From the candlestick theory perspective, it was an indecisive day. On Monday, the market gapped up and closed higher by 13.52 pts. All in all, the bearishness last Thursday was followed by an indecisive session on Friday and bullish market action on Monday. Hence, there is still a possibility that market sentiment will continue to improve from the current level.
Meanwhile, our view remains the same, i.e. the FBM KLCI’s near-term technical outlook will stay firmly bullish as long as it stays above the new uptrend line, as is marked in the above chart. Hence, even another 40 pt-drop or so would not cause a dent in the rising trend.
The market’s immediate resistance is now seen at the recent high of 1,479.6 pts while the next resistance lies at the psychological 1,500 pt-barrier, followed by the 1,524.69 pt-level. To the downside, the 1,439 pt-level is now the initial support, followed by the 1,428 pt-level.
After creating the “Morning Star”, we would need the index to crack above the recent high of 1,479.6 pts to confirm the bullish reversal signal. If not, a dip below the recent low of 1,445.33 would increase the odds of the index falling further after it violated the steeper uptrend last Thursday. Hence, we would need the market to breach either one of these two levels in order to determine its immediate direction.
To see how market sentiment could have improved after Monday’s 13.52 pts of gains, we will analyze the market’s behavior over the last three sessions prior to yesterday. Last Thursday, the FBM KLCI closed lower by nearly 18 pts in an obviously bearish session. The next trading day, the index gapped down by 6.5 pts at the opening bell, but only lost 0.39 pts during the entire session.
From the candlestick theory perspective, it was an indecisive day. On Monday, the market gapped up and closed higher by 13.52 pts. All in all, the bearishness last Thursday was followed by an indecisive session on Friday and bullish market action on Monday. Hence, there is still a possibility that market sentiment will continue to improve from the current level.
Meanwhile, our view remains the same, i.e. the FBM KLCI’s near-term technical outlook will stay firmly bullish as long as it stays above the new uptrend line, as is marked in the above chart. Hence, even another 40 pt-drop or so would not cause a dent in the rising trend.
The market’s immediate resistance is now seen at the recent high of 1,479.6 pts while the next resistance lies at the psychological 1,500 pt-barrier, followed by the 1,524.69 pt-level. To the downside, the 1,439 pt-level is now the initial support, followed by the 1,428 pt-level.
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