THE October Kuala Lumpur Composite Index futures contract on Bursa Malaysia Derivatives closed at 1,372 last Friday with an open interest and average volume of 32,146 and 7,566 contracts respectively.
The October contract rallied to the high of 1,389 last Thursday after a stronger than expected performance. The cracking of the 1,350 resistance level opened the floodgates which unleashed a strong bullish momentum, pushing the spot closer to the 1,400 level. By the end of the week, with the recovery intact the momentum indicators such as the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) have both penetrated the overbought territory signalling the strong uptrend last week.
On a week-to-week basis, the KLCI futures spot contract closed at par to the underlying index, reflecting the absence of domineering "shortists" in the market.
What lies ahead for the futures contract now that it is trapped between its historical high and its support at 1,350?
Clearly a new set of resistance lines have to be established. Besides the psychological 1,400 resistance point, the October contract will likely find new challenges as its momentum indicators suggest that there is still potential for the uptrend to continue.
There is likely to be an absence of downside pressure on the local stock market as it is still driven by technical expectation that the index will retest the 1,400 psychological barrier.
On the technical front, the Moving Average Convergence Divergence (MACD) indicator on the futures is still showing favourable development since its positive crossover seven weeks ago. This is likely to sustain the positive primary and secondary trend on the market despite some toppish signs found on the technical oscillators.
As for this week, trading is likely to be a mix of corrections and rebounds as not all of the daily oscillators are coherent. Consolidation pressure is likely to persist as momentum is still improving albeit at a milder pace.
Tactically for this week, a weak positive extension is likely to take place. Judging from the fact that there are more affirmative indicators than negative ones, it would not be surprising for buying interest to emerge should the market weaken.
Technical reports
The MACD is positive with the faster above the signal line. Both lines remain at the positive region.
The daily RSI closed at the neutral territory.
The daily CCI finished at the neutral level.
Resistance levels are at 1,392, 1,413 and 1,459. Support levels are at 1,347, 1,322 and 1,277.
source : Bernard (Business Times)
The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.
The October contract rallied to the high of 1,389 last Thursday after a stronger than expected performance. The cracking of the 1,350 resistance level opened the floodgates which unleashed a strong bullish momentum, pushing the spot closer to the 1,400 level. By the end of the week, with the recovery intact the momentum indicators such as the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) have both penetrated the overbought territory signalling the strong uptrend last week.
On a week-to-week basis, the KLCI futures spot contract closed at par to the underlying index, reflecting the absence of domineering "shortists" in the market.
What lies ahead for the futures contract now that it is trapped between its historical high and its support at 1,350?
Clearly a new set of resistance lines have to be established. Besides the psychological 1,400 resistance point, the October contract will likely find new challenges as its momentum indicators suggest that there is still potential for the uptrend to continue.
There is likely to be an absence of downside pressure on the local stock market as it is still driven by technical expectation that the index will retest the 1,400 psychological barrier.
On the technical front, the Moving Average Convergence Divergence (MACD) indicator on the futures is still showing favourable development since its positive crossover seven weeks ago. This is likely to sustain the positive primary and secondary trend on the market despite some toppish signs found on the technical oscillators.
As for this week, trading is likely to be a mix of corrections and rebounds as not all of the daily oscillators are coherent. Consolidation pressure is likely to persist as momentum is still improving albeit at a milder pace.
Tactically for this week, a weak positive extension is likely to take place. Judging from the fact that there are more affirmative indicators than negative ones, it would not be surprising for buying interest to emerge should the market weaken.
Technical reports
The MACD is positive with the faster above the signal line. Both lines remain at the positive region.
The daily RSI closed at the neutral territory.
The daily CCI finished at the neutral level.
Resistance levels are at 1,392, 1,413 and 1,459. Support levels are at 1,347, 1,322 and 1,277.
source : Bernard (Business Times)
The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.
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