The Malaysia stock market on Monday halted the four-day winning streak in which it had advanced more than 10 points or 0.7 percent. The Kuala Lumpur Composite Index now rests just beneath the 1,420-point plateau and it may take further damage on Tuesday.
At 9.15am, the FBM KLCI opened lower at 1,418.22 down 0.78 points.
RHB Retail Research, in a note today (May 23), said the FKLI experienced strong selling pressure during Monday’s session, retreating 11.50 pts to close weaker at 1,418 pts – falling below the 50-day SMA line once again.
The index initially opened at 1,427 pts but then progressed lower to hit the day’s low of 1,415.50 pts before the close. The latest bearish candlestick has erased the bulk of the gains made in the previous week.
The negative price action also affirms that the bears are back in the driver’s seat now and are steering towards the 1,412-pt support.
RHB had mentioned that if the index trades below the 50-day SMA line, this may attract strong selling pressure. For now, RHB is very likely to see an extension of the downward movement. Pending the bearish breakout of the immediate support, the firm holds on to their negative trading bias.
Traders are recommended to stick with the short positions initiated at 1,414 pts, or the close of 10 Mar. To manage the trading risks, the stop-loss is placed at 1,437 pts.
The nearest support is marked at 1,412 pts (17 Mar’s close), followed by 1,400 pts. Towards the upside, the first resistance is pegged at 1,437 pts (3 Apr’s close), followed by 1,445 pts, or the high of 7 Mar.
CGS CIMB said the benchmark gapped down and pared its earlier gains with a black candle yesterday. Prices fell below the 20-day EMA once again and tested the 1,416 support.
However, the bulls managed to keep the index in its range-bound mode for now, trading between 1,416 and1,438. Will the triangle pattern (dotted lines) pattern stay intact?
The 1,416 support levels need to hold up if the bulls are to overcome the overhead resistances which includes the 20-day EMA (currently at 1,425) followed by 1,430 and 1,438 next. A break and close below 1,416 is short-term negative for the index, targeting the 1,400 psychological levels next.
CGS CiMB’s portfolio stays in risk-on mode this week.
