FBM KLCI Technical Outlook 08 January 2013

 

Chart 1: Weekly Charting of FBMKLCI – The index could have staged an upside volatility breakout. Besides, with a convincing surge beyond the previous high of 1,679.4, we reckon that the index is poised to make an uptrend resumption. Should this expectation materialise, we believe there is still room for further upside given that the RSI has yet to turn overbought and the MACD is just about to tur

n positive.

Chart 2: Daily Charting of FBMKLCI – While the index is trending up above the 8-day SMA, it could stage a correction towards the 8-day SMA of 1,681 in the near-term. This is because the RSI has shown a bearish divergence and the index traced out a reversal pattern judging from its last Friday closing. Should this support is well defended; the index will likely continue its underlying uptrend. Otherwise, it could dip further to the 21-day SMA of 1,658.

Technicalities FBM KLCI 18 Sept 2012 >>> Tough to Crack 1,655 Record High

Strong rebound last week reverse the recent sell-off from a fresh three month low

Week-on-week, the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) gained 18.4 points, or 1.13% to 1,642.95. Average daily traded volume and value shrank to 946.5 million shares and RM1.7 billion, compared to the 1.33 billion shares and RM1.7 billion average the previous week.

FKLI Spot month September KLCI futures contract traded on the Bursa Malaysia Derivatives Berhad climbed 23.5 points or 1.46% last week to 1,638.5, reducing the discount to the cash index to 4.45 points, compared to the 9.55-point discount the previous week, as the futures market undertone stayed cautious despite the strong rebound.

 

The daily slow stochastic indicator for the FBM KLCI has climbed into the neutral zone after

triggering a buy signal last week (Chart 1), but the weekly indicator hooked down from the

overbought region following the previous week’s sell signal. The 14-day Relative Strength Index

(RSI) recovered to a more bullish reading at 54.99, while the 14-week RSI hooked up for a reading at 61.09 as of last Friday.

The daily Moving Average Convergence Divergence (MACD) trend indicator’s trigger line has

turned upwards, signaling improving upside momentum, but the weekly MACD just flashed a sell signal (Chart 2). Meantime, the +DI and –DI lines on the 14-day Directional Movement Index (DMI) trend indicator are contracting towards each other, poised to reverse last week’s bearish signal.

 

Conclusion

Despite the strong rebound seen on blue chips late last week, the weaker than usual buying momentum and discount on the futures market implies upward momentum could stall as the index climbs higher towards the record high, as market undertone remained cautious. While short-term technical momentum has turned positive, note that weekly indicators remained bearish given the sell signals on weekly stochastics and MACD indicators.

Hence, it would be challenging for the index to overcome the 1,655.49 record peak of 3 Sept this
week (Chart 3), unless buying momentum and external sentiment improves further. In any case, higher upside hurdles upon a breakout would be at 1,660 and 1,672, the respective 1.618 and 1.764 Fibonacci Projection targets of the 1,609 high of 3 April to the 1,526 low of 18 May, with 1,691 as the one-to-one projection target. Immediate support is revised upwards to 1,636, the 50-day moving average, followed by 1,609, the 3 April peak, with better support at 1,591, which is the 50% retracement of the run-up from 1,526.6 low on 18 May to the 1,655.49 peak of 3 Sept.

HAPPY TRENDING

BURSA MALAYSIA ENDS WEEK WITH A BANG

FBM KLCI climbs to historic high 07 July 2012

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) moved broadly higher over the week, hitting its intra-week high of 1,620.35 yesterday. The index recorded an intra-week low of 1,599.67 on Monday before rebounding to its all-time historical high of 1,620.55 yesterday, giving a trading range of 20.88 points.

Of the FBM KLCI's 30 index-linked components, gainers overwhelmed losers by 25 to five. 

ACE Market and lower-priced counters on the Main Market rose in tandem with other Main Market counters. The FBM Small Cap Index and the FBM ACE Market Index's week-on-week gains of 2.37 and 1.02 per cent, respectively, reflected the sectors' outperformance.

The FBM KLCI closed at its all-time high of 1,620.55 yesterday, posting a week-on-week gain of 21.40 points, or 1.34 per cent.

The following are the readings of some of its technical indicators :

Moving Averages: The FBM KLCI continued above its 10-, 20-, 30-, 50-, 100- and 200-day moving averages yesterday 

Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line.

On Balance Volume: Its short-term OBV trend continued to stay above the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 68.53 level.

FBM KLCI Technical Outlook

The FBM KLCI hit its intra-week low of 1,599.67 on Monday, staying way above the confines of this column's envisaged resistance zone (1,560 to 1,594 levels). 

Subsequent technical rebounds sent the index to its intra-week high of 1,620.55 yesterday, moving into the confines of this column's envisaged support zone (1,603 to 1,637 levels).

AirAsia, UMW, KLK and Genting's week-on-week gains of 6.72, 6.13, 4.62 and 4.45 per cent, respectively, accounted for the bulk of the FBM KLCI's week-on-week gain of 21.40 points, or 1.34 per cent. UMW replaced YTL as the week's top performer with a year-to-date gain of RM2.60, or 36.67 per cent.

The FBM KLCI's weekly chart continued to stay above its intermediate-term support (see weekly chart: A1:A2) during the week. It continued to stay decisively above its intermediate-term uptrend (A3:A4).

Chart-wise, the FBM KLCI's daily price chart continued to stay above its intermediate-term uptrend (see daily chart: B3:B4) yesterday. Also, it continued to stay above its intermediate-term uptrend support (B1:B2). Its daily and weekly fast MACDs (Moving Average Convergence Divergence indicators) continued to stay above their respective slow MACDs. However, its monthly fast MACD continued to stay below the support of its monthly fast MACD. 

The 14-day RSI stayed at the 68.53 per cent level yesterday. Its 14-week and 14-month RSI stayed at 63.15 and 65.12 per cent levels last Friday. 

Next week, the FBM KLCI is likely to re-write its all-time high, with heavyweight index-linked counters expected to continue providing the momentum thrust. The index's envisaged resistance zone is at the 1,624 to 1,658 levels, while its immediate downside support is at the 1,582 to 1,616 levels.

HAPPY TRADING

Learn Trading Multi Time Frame Analysis

Learn Trading Multi Time Frame Analysis
Multi time frame analysis is a very important aspect of technical analysis. When indicators show the same trend direction over multiple time frames, it generally suggests a higher probability of trend continuation. Alternative settings obviously shows opposite convictions but only for a shortened period.

In the field of time frame analysis, some argue that larger time frames will dominate smaller ones, while others say that smaller time frames harmonize, and will overcome larger time frames. ZLthink that this is a rich field for exploration, but the only conclusion that we have made is that alignment between time frames tend to enhance a signal’s potential. And this is a more important conclusion, then the former debate.

Let’s look at the FBM KLCI  daily chart as of yesterday 20 Feb 2012. We begin with the daily timeframe chart:

A change in indicator parameters can alter a trend readings dramatically.

Clearly the FBMKLCI is bullish, with a great setup looking to resume after some consolidation as denoted by the alternative MACD 6,12,6 parameters. While the daily chart is bullish, a trader should find out how the longer time frames are doing. Perhaps there is an oncoming train/trend that we are walking into? We want to make sure the larger time frames paint a similar story. 

Let’s look at the FBM KLCI weekly chart as of yesterday 20 Feb 2012 :

Well, it looks like a bullish set up as well. OK, maybe the FBMKLCI weekly chart is not mega bullish in outlook but do you spot any sell signals or reversal pattern anywhere? I can't ..... 

There is therefore multi time frame alignment when we compare the daily and weekly charts, increasing the trader’s bullish conviction.

Assume the daily chart is bearish (for the moment in a bearish retracement), but the weekly chart is in a non-bear trend retracement (if any), we will be very wary of a bullish trend resumption and may not want to hold convictions on to a bearish daily trade for long. Some traders may wish to wait for multi time frame alignment for a higher probability trade.

What can we expect in the coming weeks?

With that in mind, the weekly chart also warns of a minor retracement soon, since  Price is also running into resistance at 1566.  2 failed attempts to take out 1566 Resistance give creedence some measures of consolidation is expected.

HAPPY TRENDING