FKLI Preview Outlook 01 Aug 2013

FBM KLCI Futures Technicals

The FKLI spot month contract ended sharply lower on heavy selling pressure after Fitch, a global rating agency downgraded Malaysia’s sovereign credit rating. At the close, the FKLI Spot wiltered down 23 points to 1,774.5.
 

August futures prices cascaded 1.83 percent to close at 1766. Trading activities formed a long black candle, whereby selling activities intensified throughout the day. Prices were fragile as it violated major support levels to close below its 20 and 50 day moving averages.

 

Heavy sell-off triggered after the price broke below the two important support levels. As we can see in the chart, the trend is turning weak after it broke below the support line as drawn in the chart and this is also confirmed by the MACD indicator.

 

Moreover, MACD extended its selling signal for a third consecutive day, hinting more bearish potential. Thus, support and resistance for the day can be eyed at 1750 and 1775 respectively.

 

 

Intraday technical support & resistance for 1/8/2013

1st support 1,765; 2nd support 1,753-50

1st resistance 1,775-80, 2nd resistance 1,800

Strategy

Trade may short with a stop on or above 1775.