It was another directionless week for the market last week. The FBM KLCI started on a bullish note but fell and erased most earlier gains. The index managed to close marginally higher. The movement in the past one week was within the sideways trend support and resistance levels between 1,800 and 1,870 points and hence continued to be in a correction mode as mentioned last week.

The FBM KLCI declined 0.6% in a week to 1,843.92 points last Friday. Yesterday, the index closed at 1,856.39 points.

Trading volume was firm in the past one week compared with the previous week. The average daily trading volume was 2.6 billion shares, which was approximately the same as the previous week. However, the average daily trading value rose to RM2.8 billion from RM2.6 billion. This indicated more higher-capped counters favoured by institutional investors were being traded.

Foreign institutions turned net buyers while the biggest net seller was local retail. Net buying from local institutions was RM141 million and net selling from local retail was RM137 million.

For the FBM KLCI, gainers outpaced decliners eight to seven last week. The top gainers for the week were MISC Bhd (+6.2% in a week to RM7.21), Sime Darby Bhd (+4.3% to RM2.70), and Petronas Gas Bhd (+3.5% to RM18.00). The top decliners were Nestle (Malaysia) Bhd (-9.7% to RM131.00), IOI Corp Bhd (-5.4% to RM4.58), and DiGi.Com Bhd (-4.4% to RM4.54).

Market performances globally were generally mixed. Most markets in Asia were bullish except China. Markets in Europe were also slightly bullish but UK and US markets fell in the past one week.

The foreign exchange was firm last week. The US dollar index, that measures the US dollar against major currencies, remained firm at 90.20 points last Friday compared with the previous week. The ringgit was also firm against the US dollar at RM3.91 last Friday.

Price performances of commodities were mixed. The Commodity Exchange Gold Price (COMEX futures) declined 0.8% to US$1,313.90 (RM5,150.49) an ounce last Friday. Brent crude oil futures increased 0.8% to close at US$66.00 per barrel. In the local market, crude palm oil futures rebounded from their lowest level in nearly two years and increased 1.8% in a week to close at RM2,418 per tonne.

Chart-wise, the FBM KLCI remained in a sideways trading range between 1,800 and 1,870 points. The FBM KLCI range in the past one week was between 1,838.4 points and 1,864.3 points. The range is getting narrower in this sideways trend and hence a triangle chart pattern is forming. The triangle chart pattern is a continuation pattern of a trend, which is currently bullish.

Trend-wise, the FBM KLCI is in a directionless trend as the index was whipsawing against the short-term 30-day moving average in the past two weeks. However, the index is bullish in the longer term above the 200-day moving average and an expanding Ichimoku Cloud indicator. This indicates that the trend is in a long-term bullish trend correction.

Momentum indicators like the Relative Strength Index and oscillator also whipsawed against their middle levels in the past two weeks and this indicates uncertainty. However, the short-term momentum is bearish as the index is trading below the middle band of the Bollinger Bands indicator and the moving average convergence Divergence is declining.

The market is expected to continue to stay in a directionless manner if the FBM KLCI stays within the triangle chart pattern’s support and resistance levels at 1,834 points and 1,865 points.

The market sentiment may turn bullish if the FBM KLCI can break above the resistance level at 1,865 points. This would confirm the triangle chart pattern and the index may rise to the target level of the triangle chart pattern at 1,950 points but that is going to be in the intermediate term between six months and eight months.

However, if the index breaks below 1,834 points, further correction is expected and the index may decline to the next support level at 1,800 points. Nevertheless, the market is likely to trend higher after the correction based on the bullish biasness of the FBM KLCI trend.

The above commentary is solely used for educational purposes and is the writer’s point of view using technical analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.