Buying support still dominates despite the marginally lower close yesterday. The index managed to stay above the 1,630-pt level, continuing the upward bias since the hint of buying from last Friday’s candle and consequently, keeping selling activity that took over since the failed test of the 1,650-pt resistance level two weeks ago in the back seat. 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 continue higher today and again, a firm buying support should not see it closing below 1,630 pts. Immediate resistance remains at Tuesday’s high of 1,635 pts, the level it failed to close above yesterday, and is followed by 23 July’s high of 1,645 pts. Again, a break of the psychological 1,650 pts (tested twice last week) is required to cancel late July’s negative bias. However, a failure to hold above 1,630 pts suggests that the weakness seen last week may resume, confirmed by a close below 12 July’s low of 1,623 pts that it failed to break last Thursday and Friday. 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 the three-week low of 1,602.50 pts.
FCPO: Breakdown
Selling has indeed returned after another weak close yesterday. The weakness was signalled early on as the commodity could not sustain the RM3,000 open and it tumbled in the afternoon, culminating to a “Long Black Day” and a close below the RM2,950 support level. As mentioned before, a close below RM2,950 cancels out Monday’s positive “Long White Day” and confirms the failed breakout of the psychological RM3,000. Thus, the selling that started on 6 July resumes, moving in the direction of a downtrend since late March, with the latest lower highs at RM3,193 and RM3,182. The commodity stays below the declining 50-day MAV line and the 200-day MAV lines, which was reinforced by the longer-term negative indication of the “Death Cross” that emerged in early July.
The commodity is expected to trade lower today and a firm downside bias should not see the commodity closing back above RM2,950. Strong support remains at RM2,900 where a false breakout occurred last week and a violation is needed to keep the negative bias going. A crowded support level lies just below. Support is expected at the Oct 2011 covered gap of RM2,820 and then at the psychological RM2,800. Stronger support is expected at the Oct 2011 low of RM2,750. Minor support is also expected at RM2,850. Resistance is now yesterday’s morning low of RM2,975 and followed by RM3,000 and only a close back above the RM3,000 psychological level will indicate a return of buying. The next resistance is then at the broken supports of RM3,050 and RM3,100 – the 76% retracement of the late May-early June decline and 38% of the Apr-June decline. Minor resistance is also expected at RM3,030 and RM3,070.
Source: OSK
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