Stocks on Bursa Malaysia closed lower across the board yesterday as the ringgit fell past the 4.000 level to the US dollar on continued foreign selling after China devalued its currency. This marks the weakest the ringgit has seen since 1998, making the current rate of RM4.0275 to the US dollar a 17-year low. China's move had routed Asian share markets and currencies. The FBM KLCI fell 26.78 points or 1.64% to 1,609.93 after hitting an intra-day low of 1,603.26. Losers led gainers by 973 to 96 with 165 counters unchanged. Total volume rose to 2.49 billion units valued at RM2.29 billion from Tuesday’s 1.99 billion units valued at RM2.07 billion.
Following the hefty fall on Wall Street overnight, the FBM KLCI opened 7.5 points lower with a downside gap at 1,629.21 and rebounded to the day’s high of 1,629.63 shortly after opening. However, heavy selling pressure pushed the key index lower for the rest of the day to hit the intra-day low of 1,603.26 at late-afternoon before rebounding slightly in the last hour on bargain hunting to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick with a downside runaway gap which indicates a panic situation at the opening and the bears were in control for the day in pushing the index lower. Hence, the FBM KLCI is likely to further correct downward or consolidate until a reversal sign is seen. Immediate downside support zone is at 1,603 to 1,595, while the overhead resistance zone is at 1,616 to 1,629.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) was lower at 23.9 from 27.9, indicating the key index is turning very bearish and is oversold for the short term. Stochastic was lower at 3.7 from 4.3, indicating an extremely weak index strength and the key index was deeply oversold. Readings from the indicators showed that the FBM KLCI is currently very weak and bearish, but is deeply oversold, and hence, a technical rebound is imminent.
The technical picture of the FBM KLCI still remained the same in that the trend is down and bearish as the key index continued to break supports and register new lows. As pointed out in Monday’s report, and based on Elliott wave and Fibonacci projection (FP) analysis, the downside targets of the current impulse wave are 1,652 (50% FP), follow by 1,631 (61.8% FP), 1,604 (76.4% FP), 1,561 (100% FP) and 1,448 (161.8% FP); and based on Fibonacci retracement (FR) support analysis (in Tuesday’s report) for the range from the pivot low of 1,310.53 on September 26th 2011 to the pivot high of 1,896.23 on July 8th 2014, the FR support levels are 1,672 (38.2%), follow by 1,603 (50%), 1,534 (61.8%), and 1,448 (76.4%). The FBM KLCI has indeed rebounded after hitting the 1,604 and 1,603-point level yesterday. However, as the rebound was weak, the FBM KLCI may slide lower to test the psychological support of 1,600-point today and a close below this psychological support will see the FBM KLCI moving lower in the 1500 range in the near term. Immediate downside supports are at 1,600, follow by 1,597, 1,573 and 1,550 based on Fibonacci expansion for the range from 1,671 to 1,867.
Overnight, the Dow fell a marginal 0.33 points or 0.00% to close at 17,402.51. Today, the FBMKLCI is likely to trade within a range of 1,572 to 1,656.
This week's expected range: 1591 – 1768
Today’s expected range: 1572 – 1656
Resistance: 1625, 1640, 1656
Support: 1572, 1587, 1598
Stocks to watch: BSTEAD, FBMKLCI-HG, FBMKLCI-HK, FBMKLCI-HL, FBMKLCI-HM, FBMKLCI-HS, FBMKLCI-HT, FBMKLCI-HW, TAKASO
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