Index futures likely to see choppy swings

MDEX Index Futures. A weekly column by G.M. Teoh.


Last Close (June 6): 690.8 points, up 11.8 points from a week ago. Week’s high: 694.0 points; Week’s low: 674.0 points. 

The Malaysia Derivatives Exchange (MDEX) KLCI futures prices trended higher on fresh buying interest after having been locked in narrow band trading in the early sessions. Prices finally settled the week with strong gains. Light short-covering and speculative buying towards late week lifted the market to its life-of-contract highs. 

The June futures closed the week at 690.8, up 11.8 points from a week ago. Trading range for the week widened to 20 points from 694.0 to 674.0. 

Volume for the week declined sharply to 3,496 from 8,278 contracts previously. Open-interests at Friday’s close fell to 3,005 from 3,205 contracts a week ago. 

Based on chart index futures prices ended the week on a bullish setting and are expected to trend higher this week. 

The June futures prices have an immediate chart resistance at the 694.0–698.0 levels, and a successful break above this trading barrier this week could provide the technical strength for a test of the minor resistance at 715.00–700.00. 

A major chart resistance for this week is seen at the 725.0–730.0 levels. 

An immediate chart support is seen for this week at the 685.0–680.0 levels. Violation of this support could turn the chart picture negative for the immediate term. 

The daily and weekly technical indicators ended mostly positive and signalled the upward momentum could continue this week. 

The daily Money Flow Index (MFI): The daily MFI reversed direction and closed with moderate losses at 78.53 points. Analysis of the daily MFI shows the market is in a distribution or profit-taking phase. The weekly MFI finished positive at 73.26 points and indicated the near-term trend could stay positive. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) expanded on their bullish signal and indicated the cycle is continuing. The 3- and 7-day ESA-lines ended the week higher at 687.0 and 680.0 points respectively. 

Daily stochastics: The daily stochastics triggered the buy signal on June 5 and remained bullish at Friday’s close. The daily oscillators per cent K and D closed the week lower at 76.13% and 72.28% respectively. Analysis of this daily oscillators indicates the market has room for further upside trading. 

The weekly stochastics ended in the bullish extended-move zones and indicated the near term trend is toppish. The per cent K and D closed at 94.09% and 88.08% respectively. 

Daily Moving-average convergence/divergence (MACD): The daily MACD (not shown in the chart) ended bullish and called for a continuation of the positive trend this week. The daily MACD and trigger-line settled higher in the positive territory at 13.98 and 12.47 points respectively. 

The weekly MACD held on to its bullish signal and indicated the near-term trend would stay positive. The weekly MACD and trigger-line finished higher at 0.72 and minus 4.52 points respectively. 

Daily Relative Strength Index (RSI): The daily RSI (not shown in the chart) continues to indicate the underlying strength of the market is positive and ended the week higher in the positive territory 78.53 points. 

The weekly RSI settled higher at 63.30 points and signalled that the market’s near-term trend could remain positive. 

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