Stocks on Bursa Malaysia closed lower yesterday on profit-taking activities after the market rallied to a two-year high on Wednesday. The FBM KLCI had opened 1.87 point lower and rallied to an intra-day high of 1334.34 before closing 6.79 points or 0.51% lower at 1321.43. Market breadth was negative throughout the day with losers led gainers by 440 to 274, while 276 counters were unchanged. Volume was lower at 792 million shares valued at RM1.346 billion.
The price action of the FBM KLCI formed a bearish dark cloud candlestick with long upper shadows indicated heavy selling pressure when the index moved above the 1330 level. The 1330 to 1334 zone will now post as a barrier to the up move of the index. The index was supported at the 1318 level as it rebounded from there. The 5-day moving average (MA) at 1318 also provided the support. If the index breaks the support at 1318, it may move downward to test the 10-day MA support which is currently at 1300. The underlying short and long term trend remained up, while the medium term trend is sideway as indicated by the moving averages.
MACD continued to move higher but tapering off slightly, while the histogram has turned shorter indicating a reduction of the upward momentum. RSI(14) at 69.36 has crossed below the 70 mark, and Stochastic has also crossed below its slow Stochastic indicating a short term correction is in sight.
The benchmark index looks a little congested at the current level of 1320 to 1330 as the candlesticks had been overlapping for the last four day, it could be a sign of distribution.
Today, the FBM KLCI is likely to trade within a range of 1308 to 1334.
This week's expected range: 1260 – 1330
Today’s expected range: 1308 – 1334
Resistance: 1325, 1330, 1334
Support: 1308, 1312, 1316
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