As represented by the three latest black candles in the above daily chart, the index has been consolidating over the last three trading days after violating the short-term downtrend line. Thus far, the market action is still in line with our expectation following the creation of the “non-classical Hammer”. Another strong push to the upside is what we need to feel more comfortable that the previous downtrend has decisively shifted.
Anyhow, we think the market has exhibited some signs of bottoming out. Firstly, on 26 Jan 2010, the index fell by slightly more than 20 pts at one point during trading but eventually recouped more than 50% of the day’s losses and ended with only a 6.43-pt loss. As a result, the “non classical Hammer” was created. Secondly, on the second last trading day before the Chinese New Year holidays began, the FBM KLCI gapped down by 14.22 pts at the opening but successfully recouped nearly all its earlier losses on the day itself. This rebound had emerged near the bottom of the “non-classical Hammer”. Thirdly, in a subsequent trading session last Monday, the index experienced followthrough buying and ended higher by nearly 12 pts. Last but not least, the benchmark is now in the midst of violating the short-term downtrend line.
We, therefore, maintain our bullish view. We believe the few above-mentioned technical developments that happened two weeks ago have significantly reduced the risk of a further retracement. To the downside, there is an immediate support at the 1,505 pt-level, followed by the 1,500-pt psychological mark. To the upside, we are still eyeing the 1,532 pt-level as the initial
resistance, followed by the 1,558 to 1,567-pt downside gap.
Anyhow, we think the market has exhibited some signs of bottoming out. Firstly, on 26 Jan 2010, the index fell by slightly more than 20 pts at one point during trading but eventually recouped more than 50% of the day’s losses and ended with only a 6.43-pt loss. As a result, the “non classical Hammer” was created. Secondly, on the second last trading day before the Chinese New Year holidays began, the FBM KLCI gapped down by 14.22 pts at the opening but successfully recouped nearly all its earlier losses on the day itself. This rebound had emerged near the bottom of the “non-classical Hammer”. Thirdly, in a subsequent trading session last Monday, the index experienced followthrough buying and ended higher by nearly 12 pts. Last but not least, the benchmark is now in the midst of violating the short-term downtrend line.
We, therefore, maintain our bullish view. We believe the few above-mentioned technical developments that happened two weeks ago have significantly reduced the risk of a further retracement. To the downside, there is an immediate support at the 1,505 pt-level, followed by the 1,500-pt psychological mark. To the upside, we are still eyeing the 1,532 pt-level as the initial
resistance, followed by the 1,558 to 1,567-pt downside gap.
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