FKLI & FCPO : 14 August 2012

FKLI: Testing 1,650 Resistance Level

The index’s upward bias continues as buyers won the battle of 1,638 pts. The index even closed convincingly above the 1,645-pt resistance level on a “Long White Day”. This kept the selling that started after the failed test of the 1,650-pt resistance level three weeks ago on hold for the moment. The index is comfortably above both the 50-day MAV line and the rising 200-day MAV line, supported by the longer-term positive “Golden Cross” that emerged in February.

Thus, the index is expected to trade higher today. Immediate resistance is at the psychological 1,650 pts (twice-tested three weeks ago). A successful break will cancel late July’s negative bias, extending the buying since July 27. Resistance then can be reasonably expected at every 10-pt interval. However, a failure to break 1,650 pts could see a return in selling but this is only confirmed by a close below 1,640 pts, which will see the index closing below yesterday’s low, nullifying the “Long White Day’s” upward bias. Supports are at last week’s low of 1,630 pts and August’s low of 1,623 pts. Further support is at 1,614 pts, followed by 5 July’s low of 1,610 pts. Stronger support remains just above the 1,600-pt psychological level, at 1,602.50 pts.

FCPO: Another Failed Test of RM2,850 Support

Downside bias still dominates as the commodity stayed below the important RM2,900 resistance level. It is moving in line with the downtrend since late March, with the latest lower highs at RM3,193 and RM3,182. The commodity remains below the declining 50-day MAV line and the 200-day MAV line, reinforced by the longer-term negative indication of the “Death Cross” that emerged in early July. Nevertheless, the latest two candles have relatively “Long Lower Shadow Lines” and coincide with a failed test of the RM2,850 support level, giving a hint of an upward bias.

Thus, the firm downside bias should persist, with a close below the RM2,850 support level necessary to keep it intact. Support is at Oct 2011’s covered gap of RM2,820 and then the psychological level of RM2,800. Stronger support is seen at Oct 2011’s low of RM2,750. However, a failure to close below RM2,850 could see a return in buying following the two false breakdowns. Again, the broken support of RM2,900 has turned into a resistance. A close back above RM2,900 signals a turnaround in sentiment, confirming the latest two candles’ upward bias. Resistance remains at RM2,950, 1 Aug’s morning low of RM2,975, as well as the psychological RM3,000. This is followed by the broken supports of RM3,050 and RM3,100 – the 76% retracement of the late May-early June decline and 38% of the April-June decline, respectively. Minor resistance is also expected at RM3,030 and RM3,070.

Source: OSK