FBM KLCI Futures >>> 5 min and Weekly Charts Technical Outlook

FKLI Spot contract shows signs of profit takings ahead;
Weekly chart still optimistic
Last week's trading activities were dominated by bullish traders leading to further extension from the previous week's close as buyers completely shadowed the shortists. However, having drawn near to the longer term resistance at 1,450, the spot contract is now showing some signs of fatigue. With angled down oscillators by last Friday things could be different this week.

The September contract on the Bursa Malaysia Derivatives Bhd. closed at 1,432.50 last Friday with an open interest of 18,743 contracts.

Moving into this week the market may likely to take the lead from the retreating technical signals.

The daily RSI indicator looks set to join the CCI at the neutral region as the momentum may continue to weaken from the overbought territory. As firm support can be located below the 1,430 level, this may lead to further erosion of buying interest over the immediate term. A glance at the daily chart will show that the spot contract is only beginning to correct.

The weekly oscillators, however, are on a different path, beginning to climb up to the overbought region. The divergence in pace may likely lead to a case of short-term weakness and longer term gains. As the futures seem to be affirming a longer term uptrend, it may need to grapple with some corrections this week.

The daily momentum is already beginning to see a pullback from the high of 1,444 last Thursday.

Tactically, the technical indicators are non unanimous in its direction. The retreat from the overbought territories signals inherent weakness in the futures market over the immediate term, while its longer term prospect remains positive as the weekly trend remains north- bound. Support may be located at the 1,420 level which may open appetite to more structural bullish traders.

Technical Reports

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

The daily Relative Strength Index (RSI) closed at the overbought. The daily Commodity Channel Index finished at the neutral territory.