Millionaire Trend Trader: FBM KLCI - higher on lower volume

Thursday, March 24, 2011

FBM KLCI - higher on lower volume

Stocks on Bursa Malaysia managed to hold on to gains to close in positive territory yesterday despite a negative lead from Wall Street, which ended Tuesday’s trading mostly lower. The FBM KLCI gained 2.87 points or 0.19% to 1,511.97, after moving in and out of the positive territory following losses in several blue-chip stocks. Gainers outpaced losers by 515 to 251 while 284 counters were unchanged. Turnover, however, fell to 1.295 billion worth RM1.779 billion from Tuesday’s 1.435 billion shares worth RM1.688 billion.

The FBM KLCI opened 3.14 points lower at 1,505.96 and moved lower to touch the intra-day low of 1,504.95. It then rebounded to gradually climb higher and ended the day at the day’s high of 1,511.97. Chart-wise, The FBM KLCI formed a bullish piercing-line candlestick pattern which indicates the market was initially lower on fear, but the bulls fight back to lift the key index back to the positive territory. The key index had found support from the 5 and 20-day moving averages (MA) and rebounded from there. It is now closing just above the upper downtrend channel line, and may continue the up move to challenge the immediate resistance zone at 1,515 to 1,530.

MACD continued to move higher, but is still below the zero line, indicating the momentum is picking up in a gradual manner. RSI (14) climbed marginally to 51.9, and is still in the neutral zone with a bullish bias. Stochastic continued to climb higher to 63.5 which indicate an increase of the market strength and a continuation of the up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning bullish.

The short term trend of the FBM KLCI is currently up, while the medium term trend is sideways, and the long term uptrend remained intact. The key index will have to move above 1,530-level in order for it to break away from the downtrend channel and start a new uptrend. Immediate overhead resistance zone for the key index is now at 1,515 to 1,530 while the downside support zone is at 1,500 to 1,474.

Overnight, the Dow rose +67.39 points or +0.56% to close at 12,086.02. Today, the FBM KLCI is likely to trade within a range of 1,500 to 1,519.

This week's expected range: 1457 – 1531
Today’s expected range: 1500 – 1519

Resistance: 1515, 1517, 1519
Support: 1500, 1502, 1507

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The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. - Jesse Livermore

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Thursday, March 24, 2011

FBM KLCI - higher on lower volume

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