Buying stayed firm after the index closed higher yesterday. The index responded positively to the white candles of last week and as it gapped higher and held on to gains, continuing the upward bias since the hint of buying was sparked from 27 July’s candle. This kept the selling activity, which 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 upward bias is expected to continue today and firm buying support should not see it closing below yesterday’s gap of 1,638 pts. Immediate resistance remains at 23 July’s high of 1,645 pts and a close above will erase the negative bias of 26 July’s “Long Black Day”. Again, a break of the psychological 1,650 pts (twice-tested two weeks ago) is required to cancel late July’s negative bias. However, a failure to hold above 1,638 pts may suggest a return in selling. Supports are at 1,630 pts and last week’s low of 1,623 pts, and a violation of both levels should confirm the return of selling. 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: Still Below RM2,950 Resistance
Again, selling continues to dominate as the commodity remains below the RM2,950 resistance level. Thus, the selling that started on 6 July continues, moving downwards 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 lines, reinforced by the longer-term negative indication of the “Death Cross” that emerged in early July. Note however, the latest two black candles did not erase last 2 Aug’s white candle hint of an upward bias, where the commodity rebounded off the RM2,900 strong support level.
The downside bias should continue to act on the commodity, especially if it stays below RM2,950. Strong support remains at RM2,900, where a false breakout occurred two weeks ago and a violation is imperative to keep the negative bias going, especially with 2 Aug’s upward bias hint still left unchecked. A crowded support level lies just below, as support is expected at the Oct 2011 covered gap of RM2,820 and at the psychological RM2,800. Stronger support is expected at the Oct 2011 low of RM2,750, while minor support is also expected at RM2,850. However, failure to force a close below RM2,900 increases the possibility of a return of buying, and a close above RM2,950 may be enough to confirm the upward bias as suggested by 2 Aug’s candle. Resistance remains at 1 Aug’s morning low of RM2,975, followed by 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 Apr-June decline. Minor resistance is also expected at RM3,030 and RM3,070.
Source: OSK
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