FKLI & FCPO

FKLI: Firm Resistance at 1,650 Pts

The index saw little change as it stayed below the 1,650-pt resistance level. A host of weak candles, as indicated by the “Dojis” and black candles of the past two weeks, suggest firm selling pressure at the resistance level but do not signal an end to the index’s three-month rally. 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.

Again, the index has to close above 1,650 pts, or preferably above 1,655 pts, to keep the upward bias going. The next resistance level is at 1,660 pts, with further resistance expected at every 10-pt interval. However, repeated failures to break above 1,650 pts could see a continuation in selling and reignite the negative bias that appeared four weeks ago. Weakness will be confirmed if the index closes below last week’s low of 1,642 pts, nullifying the “Long White Day’s” upward bias on 13 Aug. Supports are expected at 1,638 pts, 3 Aug’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: Testing RM3,100 Resistance

The commodity’s rebound that started following the repeated failed tests of RM2,850 two weeks ago continues as it closed higher. Staying above the 50-day MAV line, its strength is still underlined by the uncovered 22 Aug’s gap above the RM3,000 psychological resistance level. Nonetheless, the rebound is still viewed in the context of a downtrend that started in late March, with the latest lower highs at RM3,193 and RM3,182. In fact, selling pressure was present yesterday, where the commodity failed to close above the RM3,100 resistance level, despite reaching an intraday high of RM3,122. The commodity remains below the 200-day MAV line too, reinforced by the longer-term negative indication of the “Death Cross” that emerged in early July.

Although the commodity is expected to trend higher, it will have to stay preferably above yesterday’s low of RM3,087 to keep the upward bias intact. Resistance remains at RM3,100 – the 38% retracement level of the April-June decline. This is followed by 16 July’s high of RM3,160 and the prior highs of RM3,182 and RM3,193. A sustained close above all three levels should bring an end to the five-month decline. However, a close above RM3,087 may embolden sellers, with selling expected to intensify on a close below 23 Aug’s low of RM3,050. Further support is at the gap of RM3,000 and a quick change in sentiment may take place should the commodity close back below RM3,000. The resulting negative bias could be potent and may even lead to a break of the RM2,850 support level. Supports are also seen at 17 Aug’s high of RM2,975, 16 Aug’s morning high of RM2,915, and 16 Aug’s low of RM2,880.

Source: OSK