The FBM KLCI rebounded in the earlier part of the week but pulled back to settle almost unchanged in a week. Market performances globally were bearish last week, led by the US market. Furthermore, the ringgit got weaker towards the end of last week. However, the index was supported by telecommunications companies.

The benchmark KLCI closed firm at 1,680.54 points last Friday from the previous week. The index continued to fall this week and closed at 1,652.63 points yesterday.

Trading volume fell last week and this indicated that the market was being more cautious. The average daily trading volume declined to 2.3 billion shares from 2.8 billion in the previous week, while the average daily trading value fell to RM2.1 billion from RM3.6 billion.

Market participation was mixed. Local institutions were net sellers. Net selling by local institutions was RM34.2 million, while net buying by local retailers and foreign institutions were RM34.2 million and RM2.9 million respectively.

For the KLCI, gainers outpaced decliners eight to seven. Top gainers were Telekom Malaysia Bhd (+12% in a week to RM2.61), Axiata Group Bhd (+6.9% in a week to RM3.88) and Digi.Com Bhd (+5.9% to RM4.49). The top three decliners were Tenaga Nasional Bhd (-3.8% to RM13.70), PPB Group Bhd (-3.4% to RM17) and Nestle (M) Bhd (-3.3% to RM144.50).

Markets closed generally lower except for China. In Asia, the decline was led by Japan’s Nikkei 225 index which fell 3% in a week. In Europe, Germany’s DAX and the UK’s FTSE 100 Index fell to a two-year low. The US Dow Jones Industrial Average fell 4.5% in a week.

The US dollar weakened against major currencies. The US dollar index rose to 96.7 points last Friday from 97.3 points at the end of the week before. The ringgit continued to strengthen to RM4.16 per US dollar, compared with RM4.18 in the previous week.

Brent crude oil snapped an eight-week decline and rebounded last week as Opec cut production. The price rose 4.6% in a week to US$61.40 (RM256.65) per barrel last Friday. Commodity exchange gold increased 2.3% from the previous week to US$1,254.00 an ounce. Locally, crude palm oil fell 2% to RM1,998 last Friday.

The KLCI is testing the immediate support level at 1,670 points after failing to rebound and test the resistance at 1,720 points. Chart-wise, the KLCI trend has remained bearish below the short-term 30-day moving average and the long-term 200-day moving average. Furthermore, the index has stayed below the Ichimoku Cloud indicator. The expanding Cloud indicator downwards indicates that the bearish momentum is gaining traction.

The Relative Strength Index and momentum oscillator have failed to climb above their mid-levels, and this indicates that the market still faces resistance. Furthermore, the moving average convergence divergence has almost fallen below its trigger line.

A breakout of the KLCI above the resistance level of 1,720 points would indicate that the market is ready for a technical rebound but a breakout below the support level could mean a continuation of the bearish trend.

However, the technical indicators on the chart favour a breakout to below the support line. So far this week, the index has fallen below the support line, and hence, the bearish trend is expected to continue towards the triangle pattern’s target of 1,610 points.

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.