FBM KLCI Technical Outlook

 

FBM KLCI Daily Chart

 

 

 

 

 

Stocks on Bursa Malaysia closed lower yesterday amid a weaker ringgit against the US dollar and declining crude oil prices. Brent, the global benchmark for crude, fell 1.5% to US$49.22 (RM198.88) per barrel after an unexpected increase in US crude stocks revived concerns about the supply glut that has capped prices for the past two years. The ringgit closed lower against the US dollar at 4.0350/0420 from 4.0250/0350 on Tuesday, in line
with most Asian currencies as the greenback strengthened on Wednesday after Tuesday’s decline. At close, the FBM KLCI eased 1.01 points or 0.06% to 1,682.06 against Tuesday’s close of 1,683.07, after opening 2.90 points weaker at 1,680.17 and moved between 1,678.93 and 1,684.39 throughout the day. Losers outpaced gainers by 518 to 253, while 429 counters were unchanged. Volume rose to 1.93 billion units worth RM1.77 billion from Tuesday's 1.83 billion units worth RM1.73 billion.

Following the decline in crude oil prices, the FBM KLCI opened 2.9 points lower at 1,680.17 and slipped lower to hit the intra-day low of 1,678.93 briefly after opening. However, the key index quickly rebounded and moved sideways range-bound in a narrow range throughout the morning session. The FBM KLCI staged a breakout at noon to hit the intra-day high of 1,684.39, but found no follow through, and the key index went into a profit-taking mode for the rest of the afternoon session. Chart-wise, the FBM KLCI formed a white spinning-top candlestick with a slightly longer upper shadow which indicates consolidation with mild upward bias. Hence, the FBM KLCI is likely to stay in range-bound consolidation mode today with an upward bias. Immediate overhead resistance zone is at 1,684 to 1,690 points, while the immediate downside support zone is at 1,679 to 1,675 points.

MACD, still above the zero-line, continued to slide lower and made a death-cross over the signal-line, issuing a MACD sell signal, and indicated the current correction may prolong or go deeper. RSI (14) slipped lower to 55.2 from 55.9, indicating further loss in the index’s short term relative strength in the mildly bullish zone. Stochastic slid lower to 69.1 from 73.8, and is staying below the slow stochastic line, indicating further weakening of the key
index for and continuation of the short term down cycle. In short, readings from the indicators showed that the FBM KLCI is currently in a short term correction mode with a bearish bias.

The near term trend of the FBM KLCI has turned down as the key index is staying below the 5 and 10-day SMA, and, the 5-day SMA has just made a death-cross over the 10-day SMA, issuing a sell signal. However, the FBM KLCI is still staying above the 15, 20 and 30-day SMA. The medium term trend is still up as the key index continued to stay above the 40, 50, and 60-day SMA and all three moving averages are pointing up. Nonetheless, the long term trend has turned from down to sideways range-bound and the FBM KLCI is staying above a cluster of long term moving averages but is still below the 360-day SMA, and the key index is now hovering near the mid-range of the 1600 to 1,730 points. For today, the FBM KLCI is likely to stay in range-bound consolidation within a range of 1,673 to 1,690 points.

Overnight, the DJIA fell 65.82 points or -0.35% to close at 18,481.48. Today, the FBMKLCI is likely to move within a range of 1,673 to 1,690.

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