The nearly 20-pt fall in the FBM KLCI last Friday led to the index closing below the recent sideways trading range which took shape after it picked up some 54 pts in the first week of the year. As a result, the index experienced a minor breakdown within the uptrend channel last Friday.
After last Friday’s breakdown, unless the index can quickly rebound back above the 1,558 pt-level, which is the support line of the recent sideways trading range, it is unlikely that the market will create a new high soon and confirm the accuracy of our projected resistance line. Instead, there is a possibility that the FBM KLCI will re-test uptrend line 1 once again.
Anyhow, we continue to view the market action within the uptrend channel as insignificant as we would expect the FBM KLCI to trend higher in the near term as long as it maintains a posture within the channel. After last Friday’s breakdown, the market’s consolidation of the first week’s massive gains is no longer being viewed as constructive. Immediate support is now seen at the 1,532 pt-level, or the previous historic high while next support is detected at the 1,500 pt-psychological mark. Immediate resistance is now seen at the 1,558-1,567 pt downside gap created last Friday. The 1,577 historic high is naturally the next resistance for the index.
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