The way the market opened and rebounded off the day-low towards the closing yesterday was somewhat similar to last Monday and Wednesday’s trading sessions. The index dropped by more than 10 pts yesterday but ended up with about 2-pt gain. As a result, it left behind a “Long Lower Shadow Line”, which indicates the market’s desire to stay above the recent low.
With this candlestick, there is a possibility that the market may be able to start trending sideways for a while before deciding on a next direction ahead. Nevertheless, the “Lower Shadow Line” has not written off the possibility of the market creating a downtrend channel. We have already drawn the potential downtrend channel in the above daily chart but it would take a while for the market to confirm it.
While watching if the index is in the midst of creating a downtrend channel, we are sticking to our Neutral view. Moreover, the market has violated the uptrend line which had previously supported its uptrend for more than 6 months.
From the current level, immediate support still lies at the 1,490 pt-level, followed by the 1,472 ptlevel.
To the upside, we are now eyeing immediate resistance at the 1,500 psychological mark, followed by the 1,524-1,536-pt area.
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