FBM KLCI : Still Above Recent Low (ext.OSK)

The failure of the FBM KLCI to break above the psychological 1400 level last Friday has resulted in the return of selling. However, it has to make a new low at below the 1300 level to keep the downtrend intact.

Anyhow, the selling in the past 2 days has yet to erase the upward bias of the last week’s “Hammer” candle. The last week’s close above the 1358 level indicates buying interest which may continue into this week. In fact, the yesterday’s decline found support at the last Wednesday’s low. Although the index has already retraced about 50% of the last week’s rebound, this pullback thus far is still considered bullish based on the Fibonacci perspective. This keeps the possibility of the index rebounding from the oversold weekly RSI alive.

Hence, in order to keep the downside pressure intact, today, the index has to close below the last Wednesday’s low of 1353 and preferably below the 1300 psychological level. If such breakdown occurs, the index may eventually test the May 2010 low of 1240, as only a minor 1270 support level, which is an uncovered gap created in 31 May 2010, could be detected. However, the failure to close below 1353 level may invite buying pressure. Resistance may come at yesterday’s high of 1382 level and a close above the 1400 level would confirm an upward bias. Further resistance is situated at the 1420 level which is at he38% retracement of the July-September fall and also the last Wednesday’s high.

(Chart extracted from ChartNexus)