FBM KLCI Futures >>> Technical Outlook

THE FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures April contract on Bursa Malaysia Derivatives closed at 1,340 on Friday with an open interest of 18,724 contracts.

The technical indicators were recovering when the market ended the week reflecting the conversion from a consolidative phase to an uptrending phase within five days. An intraweek correction to a low of 1,329 opened the door to a rebound, leading to a recovery which may continue into this week. Prices may test the upper resistance boundary again this week.

Over the medium term the weekly oscillators are still recovering despite the toppish pattern on the longer term daily Relative Strength Index and the Commodity Channel Index signals. With momentum picking up, the index futures spot contract may continue to retest its high.

Should the initial barrier at 1,350 be broken, expect the next resistance at 1,380. A serious challenge of this level can be mounted should a strong rebound take place at the earlier resistance line, failing which prices may continue to consolidate within the wider 1,350- 1,320 band.

On a shorter term perspective, the positive signal on the Moving Average Convergence Divergence (MACD) indicator continues to reflect some upside potential of the current momentum despite intermittent corrections last week. At current the level, we continue to view the market as being consolidative with some upside bias.

Tactically, the improved performance with the contract rebounding from its low is cause for modest celebration. The first challenge is for the market to recover beyond 1,350 before a deeper recovery takes hold. In the meantime, the bulls may meet resistance here this week .

Technical reports

The Moving Average Convergence Divergence indicator remains positive with the faster above the signal line. Both lines remain at the positive region.

The daily Relative Strength Index closed at the neutral.

The daily Commodity Channel Index finished in neutral territory.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.