FTSE Bursa Malaysia KLCI (.KLSE) extends losses below 1,500 as selling pressure continues
The FBM KLCI fell below the 1,500 support level in Monday morning trade amid the political uncertainty shaking investor sentiment, and is looking towards its next support at 1,470.
As investors reacted to the negative news, the index gapped down at Monday’s opening bell to hover near the support.
An attempt to recover losses following the initial sell-down failed to gain traction, and the share gravitated to 1,492.26 by the end of the early session, 38.94 points below Friday’s close, and slightly above the day’s low of 1,491.20.
Trading on Bursa Malaysia has a flurry of activity with 2.1 billion shares exchanging hands for a value of RM1.9bil. Market breadth was overwhelmingly negative with 926 decliners, 105 gainers and 172 counters unchanged.
The breach of the 1,500 mark remains tentative, so close to the support, and there remains a chance that the index could return above the level as investors turn to bargain hunting in the late session.
However, short of more clarity over the outcome of the political drama, there would be a shortage of buying interest on the market.
Looking at the technical indicators, the signs are predictably bearish with the slow-stochastic momentum index and 14-day relative strength index falling into oversold levels.
The daily moving average convergence/divergence line has also slipped below the signal line to reflect the negative sentiment.
Today’s selling pressure serves as yet another negative catalyst to exacerbate the weak outlook on the local market.
Prior to this, the index had been caught in a short-term descending trend line that can be traced back to end-December 2019.
The longer-term, dominant trend has also been negative on the FBM KLCI, with a bearish line extending back to April 19, 2018, in the run up to GE14 and at the early stages of the US-China trade war.
The FBM KLCI has lost about 21% of its value since the start of the downtrend.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1,563.24.
The projected upper bound is: 1,522.53.
The projected lower bound is: 1,454.67.
The projected closing price is: 1,488.60.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 12.8065. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 24.80. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 14 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -327.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 14 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
FTSE BURSA KLCI closed down -41.140 at 1,490.060. Volume was 139% above average (neutral) and Bollinger Bands were 9% narrower than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1,534.26 1,570.55 1,602.24
Volatility: 16 14 10
Volume: 124,441,840 114,907,792 111,656,848
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE BURSA KLCI gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FTSE BURSA KLCI is currently 7.0% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .KLSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .KLSE and have had this outlook for the last 20 periods. Our momentum oscillator is currently indicating that .KLSE is currently in an oversold condition.
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