Stocks on Bursa Malaysia closed last Friday on a weak note, in tandem with regional bourses following an unexpected move by the US Federal Reserve to raise the discount rate on Thursday night, after Wall Street had closed. The move raised fears that the US monetary tightening might come sooner than expected.
The FBM KLCI gained 4.28 points or 0.34% to close at 1257.67 week-on-week, and the weekly volume dropped to 1.767 billion shares valued at RM3.175 billion from 3.365 billion shares valued at RM5.685 billion the previous week as the local market was closed on last Monday and Tuesday for the Lunar New Year celebration.
On the weekly chart, the FBM KLCI formed a black inverted hammer-like candlestick which indicates weakness that surfaced after a technical rebound. The rebound was weak as the index couldn’t cross above the 10-week moving average resistance at 1271. As it was mentioned in last week’s report, the zone from 1265 to 1277 will form a strong resistance zone to the technical rebound of the index.
Weekly MACD continued to slide southward, indicating the continued weakening of market momentum. Weekly RSI has hooked-up reflecting the rebound, but is in the mildly bullish zone, and weekly Stochastic at 31 has just hook-up but is in the weak zone. The mixed signals of the indicators reflected the corrective mode of the benchmark index, which is mildly bearish.
As the FBM KLCI has comes below the 5 and 10-week moving average, the current short term trend of the index is down. The benchmark index is now trapped in a corrective mode as it is subjected to strong overhead resistance zone at 1265 to 1276 and support zone below from 1240 to 1250. If the index is able to break above 1276, it might trigger a rally towards 1300; however, if it breaks below 1250 it might also triggers a bear move to re-test the recent low of 1224.
For this week, the FBM KLCI is likely to trade within a range of 1240 to 1276, as for today it is likely to trade within a range of 1251 to 1263
This week's expected range: 1240 – 1276
Today’s expected range: 1251 – 1263
Resistance: 1259, 1261, 1263
Support: 1251, 1253, 1255
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