Stocks on Bursa Malaysia rallied higher yesterday in tandem with strong performance of regional markets after China's move to allow more flexibility in the Yuan exchange rate boosted confidence in the global economy. The FBM KLCI surged 17.60 points or 1.34% to close at 1,335.29, after opening 3.09 points higher at 1,320.78. Gainers outpaced losers by 591 to 161 while 208 counters were unchanged. Volume increased substantially to 921 million shares worth RM1.515 billion from 537 million shares valued at RM1.16 billion last Friday.
The FBM KLCI opened with an up gap of 3.09 points and traded higher to close near the highest point for the day. It formed a bullish Marubozu candlestick which indicates buyers were in control for the day. The key index crossed a key resistance at 1320 easily when it opened with a gap at 1320.78. The benchmark index may continue to move higher today on follow through buying momentum; however, it may meet strong resistance when it comes close to the resistance zone at 1340 to 1350.
MACD continued to move higher and has crossed the zero-line into the positive zone, indicating the FBM KLCI has again turned bullish with a continued pick up in upward momentum. RSI(14) at 67.4 continued to surge higher into the bullish zone. Stochastic at 94.6 continued to move higher into the overbought zone, indicating the key index is full of strength. Signals from the indicators indicate a bullish state of the benchmark FBM KLCI, and it may move higher.
The short term trend of the FBM KLCI has turned up, and the longer term trend too remained up. As the benchmark index move higher, it is coming close to its strong resistance zone at 1340 to 1350, and active profit-taking activities is expected when the index move into this zone. The immediate downside support zone now lies at 1300 to 1320.
Speculation of China loosening the Yuan's peg to the US dollar should provide some short-term catalyst for the markets globally with trade tension easing on the back of the surprise announcement.
Overnight, the Dow closed -8.23 points or -0.08% lower at 10,442.41. Today, the FBM KLCI is likely to trade within a range of 1316 to 1349.
This week's expected range: 1279 – 1349
Today’s expected range: 1316 – 1349
Resistance: 1340, 1345, 1349
Support: 1316, 1325, 1330
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