Index analysis
Positive closing from world markets due to ECB announcement
on the stimulus package. As we all know, stimulus will act as steroid to
financial market, it will reduce the interest rate and encourage fund to flow
back into equities markets. As a result, emerging market will be flooded with
funds from EU and Malaysia will be
one of the beneficiaries. Based on the daily
chart of KLCI, minor support of 1860 is still holding strong. Long white candle
on the latest closing suggest that the uptrend momentum is back and will test
resistance level at 1890. The argument above is supported by ADX indicator, as
D- line start to pointing down while D+ pointing up. Failure to penetrate
resistance level at 1890 will lead to a pullback that may contribute to
sideways movement.
Trading strategy
The market is good to go, keep your focus on big cap
counters. Normally the market will respond in stages, first leap on the market
will benefit big cap, then it will pass to mid-cap and conclude by small cap.
Investor may start accumulate shares as the good news may push the price
further. As always, buy on breakout is the best strategy for short term and
swing trader. Use candle stick, volume and indicator to confirm the breakout.
Price projection
Resistance – 1890 (previous high) 1900 (psychological high)
Support – 1860 (minor support) 1852-1840(first
support zone) 1800-1780(second support )
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