Technical outlook for Bursa improving, says Kenanga Research

  • Markets
  • Tuesday, 17 Apr 2018

KUALA LUMPUR: The overall technical picture for Bursa Malaysia has been improving over the past two trading days and there is a possibility the FBM KLCI could test the previous high of around 1,880, Kenanga Research said.

It said on Tuesday the KLCI is now hovering above key simple moving averages (SMAs) which are currently in a “Golden Cross” state, with the moving average convergence divergence (MACD) indicator also having staged a bullish crossover against its signal-line.

The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices.

“From here, the index is likely to retest previous high of around 1,880 (R1), with a decisive breakout deemed as an affirmatively positive sign, potentially seeing higher resistance at 1,910 (R2).

“Conversely, downside supports can be located at 1,840 (S1) and 1,800 (S2),” said Kenanga Research.

Meanwhile, OANDA’s head of trading for Asia Pacific, Stephen Innes said local traders think GE14 can't get here quick enough. 

“Election risk is not something unique to Malaysia, but unlike some of the recent surprising election results in the UK or the US, it’s highly unlikely Malaysia current ruling party will get upended,” he said.

Innes said nonetheless, that slight chance is keeping Malaysian bond buyers on hold.

So with the Malaysia Bond market expected to remain quiet ahead of the election, currency markets will remain equally silent and will continue to trade with a defensive posture ahead of the polls.

“The market was positioning for a stronger ringgit into the election, so with a base forming around 3.87, the logical move it to reduce shorts and wait for the better level to re-engage long  ringgit positions.

“So we should expect the US$-ringgit to trade within and continue to revert to the upper levels of the current ranges,”  he said. 

Markets , Analyst Reports