Mid Day Market Update: Cautious Mood Ahead of Rates Decision, KLCI Traded in Range Bound

Bursa Malaysia traded in mixed for the morning session of Wednesday. The key index, FBM KLCI was up 1.67 points to 1,465.36, to end the morning session on a positive note.

The market breadth was mildly positive with 338 gainers compared with 329 decliners. Meanwhile, trading volume was 1.08 billion shares valued at RM539.37mil.

Market participants are expected to stay cautious in light of the US interest rate decision that is due to be announced later today.

WTI Crude :  Struggling To Rebound Above The 200-Day SMA Line

Maintain short positions. The WTI Crude reversed its intraday rebound yesterday as it fell to close on a negative tone. It fell by USD1.72 to close at USD94.98 – still slightly above the 200-day average line of USD94.30. The commodity started off at USD96.33 and then bounced off to hit the USD99 intraday high before selling pressure kicked in. Selling pressure then dominated towards the end of the session, draggin the WTI Crude towards the USD94.76 low before the close. With the long upper shadow printed yesterday, this signals that the rebound above the 200-day average line may not be expected in the coming sessions – as selling pressure was seen as obvious as the commodity wrote-off the intraday rebound yesterday. This is consistent with our earlier expectation for the selling momentum to persist towards breaching the 200-day average line and also the USD93.67 immediate support. Hence, no change to bearish bias.

COMEX Gold: Consolidating Below The USD1,750 Resistance

Maintain short positions. After failing to break past the USD1,750 resistance, the COMEX Gold resorted to consolidation yesterday, pulling back USD1.40 from the previous session to settle at USD1,735.70. It started the session at USD1,735.90. After trading between USD1,744.30 and USD1,729.60, it closed at USD1,735.70. The latest “lower high” price action indicates that the bulls are now taking a breather. If the momentum continues, the commodity should chart “lower lows” and “lower highs” in coming sessions, and retrace towards the USD1,700 support level. If it jumps above the USD1,750 resistance, this would improve market sentiment and attract strong buying pressure. Despite the commodity forming a Bullish Engulfing pattern – showing strong support has formed at USD1,700 – it is yet to see a positive follow through price action. Hence, RHB Research is holding on to its negative bias until the trailing-stop is triggered.

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