Millionaire Trend Trader: FBM KLCI

Friday, January 28, 2011

FBM KLCI - technical rebound

Stocks on Bursa Malaysia rebounded to close higher yesterday after six days of consecutive losses. The rebound was led by plantation and finance stocks. The FBM KLCI ended at 1,526.96, up 6.96 points or 0.458%, after opening 6.48 points better at 1,526.48. Gainers led losers by 538 to 238 while 263 were unchanged. Volume decreased to 1.410 billion shares, valued at RM2.217 billion, compared with 1.420 billion shares, worth RM2.601 billion, registered on Wednesday.

The FBM KLCI opened with an up gap of 6.48 points and surged to the intra-day high of 1530.81 before profit-taking activities pushed it off low to stay sideways in the positive territory for the rest of the day. Chart-wise, the FBM KLCI formed a Doji candlestick with longer upper shadow. It confirmed the reversal signal issued by the hammer candlestick the day before. However, it also indicates the reversal was met with strong overhead resistance at 1530 level. The key index may continue with its up move today, but will encounter resistance post by the 5 and 30-day moving averages at 1532 and 1537.

MACD continued to move lower, but at a reduced pace, indicating the downward momentum is slowing down. RSI (14) has hooked up to 42.9, but is still in the bearish zone. Stochastic at 18.7, has also hooked up after entering the short term oversold zone. Readings from the indicators indicated that the up move could be just a technical rebound, and maybe short live as the short term downtrend has not really been reverse yet.

The short term trend of the FBM KLCI remained down as the key index continued to stay below all the short term moving averages. Nonetheless, the medium to long term uptrend remained intact. Immediate overhead resistance zone is at 1530 to 1550, while the downside support zone is at 1520 to 1500. The FBM KLCI is likely to be in consolidation mode while the second and third liners will remain active in rotational play.

Overnight, the Dow rose +4.39 points or +0.04% higher to close at 11,989.83. Today the FBM KLCI is likely to trade within a range of 1519 to 1536.

This week's expected range: 1508 – 1605
Today’s expected range: 1519 – 1536

Resistance: 1530, 1533, 1536
Support: 1519, 1522, 1524

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Friday, January 28, 2011

FBM KLCI - technical rebound

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