FKLI & FCPO (8/8/2012)

FKLI: No Selling Yet

ying stayed firm as the unchanged close yesterday. Although follow through buying is still found wanting, as indicated by the “Doji” formed yesterday, the index managed to hold on to the gains of Monday, continuing the upward bias since the hint of buying was sparked from 27 July’s candle. That still keeps the selling activity, which took over since the failed test of the 1,650-pt resistance level two 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 upward bias is expected to continue today and firm buying support should not see it closing below Monday’s gap of 1,638 pts. Immediate resistance remains just above the 2-day high at 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: Break of RM2,900 is Needed

Again, selling continued to dominate as the commodity remained below the RM2,950 resistance level. In fact, yesterday’s close was the lowest since the rebound of 30 July. Thus, the selling that started on 6 July continued, moving downwards since late March, with the latest lower highs at RM3,193 and RM3,182. The commodity remained 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 three black candles did not erase the 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 persist, especially if the commodity stays below RM2,950. Strong support remains at RM2,900, where a false breakout occurred two weeks ago and again yesterday. The lower close increases the possibility of a breakdown, but a close below RM2,900 is needed to keep the negative bias going, especially with the 2 Aug’s upward bias hint still left unchecked. Supports are expected at Oct 2011’s covered gap of RM2,820 and at the psychological RM2,800. Stronger support is seen at the Oct 2011’s low of RM2,750, while minor support is expected at RM2,850. However, failure to force a close below RM2,900 may embolden buyers, while a close above RM2,950 may be enough to confirm the upward bias, as suggested by the 2 Aug’s candle. Resistance levels remain at 1 Aug’s morning low of RM2,975 and 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 levels are also expected at RM3,030 and RM3,070.

Source: OSK