KUALA LUMPUR (March 17): The FBM KLCI is expected to trend upward and breach the 1,800-point level if it manages to trade above the 1,790 level.
The U.S. dollar weakened broadly on Monday ahead of the Federal Reserve's policy meeting on worries that the central bank could become more cautious about raising interest rates, while Wall Street stocks rose as the greenback's fall eased worries about its effect on corporate profits, according to Reuters.
Crude oil fell 2 percent in a day of volatile trade. U.S. crude at one point fell more than 4 percent to hit a six-year low before paring losses in afternoon trading, it said.
U.S. stocks rallied on Monday as the U.S. dollar eased back from its recent peak and worries eased about the timing of a Federal Reserve interest rate hike, according to Reuters.
AllianceDBS Research in its evening edition Monday said that dampened by the weak down close in last Friday, the FBM KLCI had on March 16 fallen to 1,774.30 as market participants continued to play on the selling side in anticipation of a lower market.
However, it said non-follow through selling pressure in the area of 1,774.30 prompted risk taking buying interest, this lifted the benchmark index to a day’s high of 1,787.29 before settling lower at 1,780.54 (- 1.21 , - 0.07%).
“In the broader market, losers outnumbered gainers with 504 stocks ending lower and 294 stocks finishing higher. That gave a market breadth of 0.58 indicating the bears were in control,” it said.
AllianceDBS Research said the test of the recent low of 1,774 level (March 11) followed by the close at 1,780.54 on March 16 showed that market participants did not wish to see the benchmark index to close below the 1,780 level for fear of sentiment deterioration.
It said the rebound from the low on March 16 may have indicated the availability of supportive buying interest at 1,774, but it remained pre-mature to confirm anything at this juncture.
The research house said a trade above 1,790 should see attempts to break the 1,800 level on the upside.
However, it said a fall below 1,774 would put pressure on the market down to the subsequent support at 1,750.
Indicator wise, the MACD is below the 9-day moving average line, it said.
“The analysis of overall market action on March 16 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,787.29 level on March 17,” said AllianceDBS Research.