The Malaysia stock market on Wednesday wrote a finish to the five-day losing streak in which it had tumbled almost 65 points or 4.6 percent. The Kuala Lumpur Composite Index now rests just above the 1,400-point plateau although it may head south again on Thursday.
At 9.20am, the FBM KLCI lower at 1395.69.
RHB Retail Research cited today (March 16) that after experiencing a drop on Tuesday, the FKLI opened higher and closed 10 pts stronger at 1,397 pts yesterday. The index surged to 1,395 pts at the opening and fluctuated between 1,400.50 pts and 1,391 pts – ultimately closing above the opening level.
The formation of a “Bullish Harami” reversal candlestick yesterday indicates that a short-term positive rebound is currently underway. However, the major downtrend remains intact below the immediate resistance level of 1,423 pts, and a “lower low” bearish pattern persists below the 200-day average line.
Despite the RSI indicator improving from 21% to 28%, the trendline is still declining, indicating that no divergence signal has occurred yet. Therefore, we do not anticipate a rebound in the coming sessions, despite yesterday’s “Bullish Harami” pattern. We expect the FKLI to continue its downtrend towards the low of Oct 2022 (1,360.50 pts) before reaching 1,300 pts. We maintain our bearish bias.
The retail house recommends that traders stick to short positions as RHB initiated these at 1,414 pts – the close of 10 Mar.
To manage the trading risks, the initial stop-loss threshold is placed at 1,445 pts.
The immediate support is set at 1,360.50 pts or 14 Oct 2022’s low, followed by 1,300 pts.
The immediate resistance is pegged at 1,423 pts (1 Mar’s low), followed by 1,445 pts, which was 7 Mar’s high.
