Stocks on Bursa Malaysia ended broadly lower yesterday on profit-taking after a strong up move the day before, as bearish regional bourses also weighed down local investor sentiment. The FBM KLCI fell 11.85 points or 0.89% to close at 1323.44 after a 10-day winning streak; it had opened 1.09 points lower at 1,334.20. Losers outpaced gainers by 434 to 226 while 255 counters were unchanged. Volume was significantly lower at 672 million shares worth RM1.099 billion from 921 million shares worth RM1.515 billion on Monday.
The FBM KLCI opened 1.09 points lower at 1,334.20 and traded lower as the day progressed to close at the lowest point for the day, forming a bearish Harami candlestick, which indicates sellers were in control throughout the day. The appearance of this candlestick formation marked a pause to the 10 consecutive winning days of the benchmark index, and is a top reversal signal. After losing 98 points in nine consecutive days in May, the benchmark index has recovered 86 points in four weeks since late May.
MACD tapered off slightly as shown by the shorter histogram, indicating a pause in the upward momentum. RSI(14) at 59.7 has hooked down and is back to the mildly bullish zone, reflecting effect of the strong profit-taking move. Stochastic at 92.5 has also hooked down but still above its slow stochastic and is in the overbought zone. Signals from the indicators are pointing towards a possible further correction to the key index.
The FBM KLCI is now bound by a strong overhead resistance zone at 1330 to 1350 and an immediate support zone below at 1300 to 1320. The 5 and 60-day MA at 1316 and 1318 will provide immediate support if the key index corrects further. The underlying short and long term trend of the key index remained up, while the medium term trend is sideways.
In view of a lack of fresh leads locally, the FBM KLCI will continue to track the performance of regional bourses.
Overnight, the Dow closed -148.89 points or -1.43% lower at 10,293.52. Today, the FBM KLCI is likely to trade within a range of 1309 to 1338.
This week's expected range: 1279 – 1349
Today’s expected range: 1309 – 1338
Resistance: 1327, 1331, 1338
Support: 1309, 1316, 1320
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