Will KLCI in Bullish Movement by Potential Rebound in Crude Oil Price?

The week started with bearish sentiments and traded range bound thorough the week and ended on a positive note on Friday. The FBM KLCI index gained 33.27 points or 2.04% on Friday. The Finance Index increased 1.56% to 13882.41 points, the Properties Index up 1.24% to 1111.47 points and the Plantation Index rose 4.51% to 7916.2 points. The market traded within a range of 36.18 with a high of 1667.80 and a low of 1631.62 during the session. 3 Days Free Trial Signals

The KLCI surged and closed higher at 1667.80 points amid overnight gains in US market after oil prices rose for the third consecutive day. The performance of our local bourse was in tandem with most of our regional peers following the Bank of Japan unexpectedly eased monetary policy further by introducing a negative interest rate policy. 

Market Forecast for week ahead:

The KLCI index is expecting it to continue its bullish movement in coming week on the back of the expectation of the potential rebound in the Crude Oil price, however the market can take resistance at the level of 1675 and the crossover of this level can lead to a bullish movement in near term and after that the market can test the level of 1700.

Technical indicators:

RSI for this week is 49.312 with CCI at -35.876. Besides, difference line of MACD -14.041.

Global factors and World Indices

• Asian shares jumped on Friday and the yen swooned after the Bank of Japan stunned markets by adopting negative interest rates in its boldest step yet to reinflate the long-languishing economy.
• The yen fell across the board and sovereign bonds rallied after Japan's central bank said it would charge 0.1 per cent for excess reserves parked with the institution, an aggressive policy pioneered by the European Central Bank.
• China stocks rose more than 3 per cent on Friday, recovering losses at the end of a tumultuous week, having recorded their worst month since the global financial crisis.The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended up 3.2 per cent.
• Hong Kong stocks rallied Friday, ending a volatile month on a high, after Japan announced a surprise negative interest rate policy, effectively charging banks to store their cash in a bid to kickstart lending in the country.The Hang Seng Index rose 2.54 per cent, or 487.28 points, to close at 19,683.11.
• Japan's Nikkei share index whipsawed after the announcement before ending up 2.8 percent, to mark a 3.3 percent weekly gain, while the benchmark 10-year JGB yield touched an all-time low of 0.090 percent.
• Australian shares ended 0.6 per cent higher on Friday in see-saw trade, after the Bank of Japan unexpectedly slashed its benchmark interest rate below zero and a rebound in Chinese stocks.The S&P/ASX 200 index rose 29.34 points at the close of trade .
• Bank lending in Singapore fell in December from the previous month, reflecting a contraction in business loans.Loans through the domestic banking unit - which essentially captures lending in all currencies but mainly reflects Singapore-dollar lending - stood at S$600 billion last month, down 0.7 per cent .
• The Bank of Japan on Friday adopted a negative interest rate policy to spur lending and help drive inflation towards its two-percent target.The -0.1 per cent interest rate introduced by the BoJ means that banks parking their money with the central bank are actually charged for doing so.
• The dollar rallied over 1% to one-month highs against the yen on Friday, after the Bank of Japan surprised markets by announcing a negative interest rate policy.
• Gold slid lower on Friday, as investors locked in profits from the precious metal’s recent climb to one-and-a-half month highs and as the stronger U.S. dollar weighed
• Oil extended a recent rally in Asia on Friday, boosted by weakness in the dollar and Russia saying it could meet the Opec producers' group for talks on possible output cuts to ease a painful supply glut.

FOREX and COMEX Market Updates

GOLD

Gold markets although positive overall had a negative session on Wednesday. We are getting signals for an initial uptrend. A break above a recent high from yesterday is giving us the confidence to say that the market might reach the $1150 level. At present, the money is flowing into the market and with time it might go higher. We are currently looking for pullbacks to enter long positions. Given enough time, we believe that we will go much higher than that, and it appears that money is starting to flow into this market. 3 Days Free trial Signals

SILVER

Silver markets due to a support at the $14.40 level was able to turn an initial fall and form a Hammer. The bullish tendencies of a hammer suggest that the traders might take this market higher. A sound strategy for entering long positions would be to wait for the $14.60 level to be breached. Any pullback that occurs at this moment, should be overall supportive.

CRUDE OIL

Crude Oil prices climbed higher on Wednesday inspite of a larger than expected build in inventories. The 10-day Moving Average is currently showing a support in the vicinity of 30.17 level whereas a resistance level seems to be present near the downtrend line at the 34.25 level. The overall momentum seems to be negative whereas the MACD(Moving Average Convergence Divergence) is currently somewhat indecisive. The RSI(Relative Strength Index) too is indecisive. The present scenario seems to be made for short positions.

EUR/USD

The EUR/USD stepped up due to the announcement by the Federal Reserve that the federal rates would remain unchanged for the time being; however they did express their doubts on whether the inflation would reach their target goal. Although a degree of relaxation cold be scene but the overall scenario was not as dovish as expected. Hence, march can be expected to be a tough ride. The 10-day Moving Average acted as the support for the rate at 1.0870 whereas resistance is seen at 1.10.

GBP/USD

The GBP/USD has continued with its downtrend during the Trading session on Wednesday, as the bears seems to be holding the reigns of the overall market. Due to the downtrend, we would be looking to short the market on short term rallies and at breakouts below the bottom of the range for the day. Due to the expected Preliminary GDP numbers in the day and the strengthening US dollars, we are not taking any long positions for the time being.

AUD/USD

The AUD/USD climbed higher during the day on Wednesday, breaking above the most recent resistance. However, the 50% Fibonacci Retracement, level still posed a massive resistance in the later half of the trading session; hence we remain focused on short positions. Following that we have an uptrend line that we had previously breached which is in close proximity with the 61.8% Retracement level. Hence, we need to be extra cautious in choosing our positions. At the moment, the wise move will be to look for exhaustive candles in order to start selling again.

USD/JPY

The USD/JPY went up during the trading hours on Wednesday, crossing the 1118.50 level. We will believe the the market is all poised to climb up, if it breaks above the top of the range. The first stop of the ascend would be the 20.50 level. Our suggestion would be to buy supportive candles at lower levels.

Gold High Due to Lower US Stocks, MACD Suggesting Positive Momentum

GOLD

Gold prices are facing resistance almost in the same as the January highs of 1,113 whereas a better than expected Chinese trade data gave a support near the 10-day Moving Average at 1,085. Gold prices climbed higher due to the US stocks moving lower and the investors running towards the yellow metal to take cover. MACD(Moving Average Convergence Divergence) indicator is suggesting positive momentum. Trading Signal Trial

SILVER

The Silver markets on Wednesday climbed up but were still within the same range which they have not left for some time. We have a resistance at $14.60 level, but with people rushing towards gold suddenly has brought massive buying buying pressure in gold. Hence, silver too might get some taste. we have hopes that the market might garner some short term gains in the immediate future. Any pullback from this level, might see a support at the $13.80 level.

Crude Oil

Crude Oil prices remained stationary and consolidated in the same range, despite of decline in inventories if heating oil and gasoline. We have a resistance in the vicinity of 10-day Moving Average at 33.86 and a support near the January low at 29.93. The Relative Strength Index(RSI) showed an oversold level. In any case, if we fall any more; the downward move would only gain speed whereas any upward rallies should be exploited.

GBPUSD

The GBP/USD pair took a dive on Wednesday under the negative market pressure. The pair somehow managed to form a hammer and gives some hope of a residual resilience left. Any type of rally initiating in this area has the potential to be exploited as a short position. Even a breach below the lows from the past few days would serve the same purpose. Long positions at the moment are not comfortable to enter at the moment.

EURUSD

The EUR/USD after having found a jumping base at 1.08 level had a roller coast ride on Wednesday moving to and fro for the entire duration. The majority negative sentiment that is prevalent at the moment is dense enough to keep us on the sidelines for the moment. For the time being, best move is to exploit short positions on short term rallies.

AUDUSD

The AUD/USD kept fluctuating around the 0.70 level which led to the pair slipping on Wednesday. The present scenario signals that it might go even lower. An up trend line was noticed to have been breached which can be considered to be a shift in the momentum and the rallies are also observed to be under selling pressure. Our expectations are around 0.65 level being reached given sufficient time.

USDJPY

The USD/JPY saw massive resistance at 118.50 level and dropped on Wednesday. The present scenario also suggest that the drop might continue. The main point of this pair is that ii is very sensitive to risk aversion and hence would see a large majority returning to sell US dollars.Long positions are only to be entered in case the 119 level is breached.

US Dollar to be Relatively Stronger than Precious Metals

GOLD

Gold markets, once again to check the depths breaking below the $1090 level on Tuesday. We have a support at the $1080 level, which might be tested if it breaks the current level. Current scenario shows the US dollar to be relatively stronger than precious metals. Short positions would be our choice once we breach the$1080 level and a likely target might be $1060 level. Long positions are not to be entered without confirmation of sorts in the form of a supportive candle. Live Trial Signals

SILVER

Silver markets dipped again on Tuesday, breaching the $13.80 level.Due to a support below, we are sceptical there might a break in this fall in the near future. At present the comfortable move to take would be a short position. There happens to be resistance extending to the $14.00 level and we believe any attempt to rally might turn into consolidation. 

Crude Oil 

Crude Oil went on quite a ride on Tuesday, making a low of $29.93 per barrel which happens to be a two year low and later came back to $30.57 per barrel. Expectations are that the prices might recover to some extent in light of larger than expected draw as stated by the American Petroleum Institute. We see a resistance near the 10-day Moving Average at 34.60 level and the MACD(Moving Average Convergence Divergence) is signaling a negative momentum.

USDCAD is having potential to move upto the level of 1.5100 but the next trigger would be CRUDE OIL Prices (below $30, WTI/NYMEX)

Important FOREX Counters for 2016

GBPUSD

The GBP/USD pair dipped below on Tuesday, touching the depths around 1.45 level. At the moment, short positions are the ones that are more comfortable to enter in.Our suggestion would be to short any rally that shows signs of exhaustion below the 1.45 level. Due to the new low, it seems the current down trend might continue for the moment. Relatively it seems it US dollar will continue to strengthen.

EURUSD

The EUR/USD pair seemed to be in a hurry to reach the 1.08 level as it slipped on Tuesday. The present picture suggests it might check the 1.07 level which has a history of being quite a turbulent area.it seems the pair is going to attract more buyers in the immediate future, however the 1.08 level might have more supportive characteristics than being assumed.The present outlook does suggest the overall bearishness might prevail for some time.

AUDUSD

The AUD/USD pair went for a roller coast ride on Tuesday as it continued to fluctuate in the 0.70 level. The overwhelming fears of the gold markets falling and the softness in the Australian dollars is what has clouded this pair. Our interest in the short positions is due to a recent trend line breakout. Long positions at the moment are not comfortable to enter in.

USDJPY

The USD/JPY made an attempt to rally on Tuesday, however the sellers returned and formed a star like candle. This forces us to believe that the pair will continue to fall and we still have a chance of sellers returning after a short term rally. We might enter into long positions but only when we breach above the 119 level, which doesn’t look like it will happen in nearby future.

Market Updates and Impact of Crude Oil Downfall

GOLD

Gold prices were affected negatively with the Fed’s LMCI (Labor Market Conditions Index)rising to 2.9 points in December.Gold markets had an inside day with the high being lower than prior days high and Low being higher than previous days low which is a signal of prevalent indecisiveness in the market. We have a support in the vicinity of the 10-day Moving Average at 1,080 and a Resistance at 1113 level.The MACD(Moving Average Convergence Divergence) is giving a positive Momentum. 3 Days Trial of live Signals

SILVER

Silver markets spent the Monday session in a volatile mood, mainly due to the associated effects of the $14 level. At this point, there is a possibility that we can rally from here. It appears we have sufficient selling pressure to prevent the market from falling.Capitalizing on that, we are currently looking to take advantage of signs of exhaustion in short term rallies. Consequently we are short term sellers.

Crude Oil

Crude Oil is currently diving to the depth reaching lows of $30.88 i.e.nearly 7% down.At present, it seems that the down trend that occurred till now might continue in the short term. With the crude oil inventories at 80-year high; demand seems to be taking the beating. The MACD(Moving Average Convergence Divergence) indicator is giving the momentum to be negative;hence signaling short positions.

GBPUSD

The GBP/USD made an attempt to rally during the Monday session; however, it turned back and formed a shooting star instead. The shooting star candle happens to be located immediately above the 1.45 level,hence we are refraining from short position at the moment. We will see a spurt in selling as we breach below the 1.45 level and that is what is keeping us on our toes. On the other hand, any move upwards and we would like to have a confirmation signal before we make any decision .

EURUSD

The EUR/USD pair had a hard time on Monday, falling initially on Monday and later taking a U-turn to rally at the time of market close. At present, it seems that it is going to be volatile in short term with majority movement being sideways. The present level of volatility in this market is not to be taken chance with and hence we are currently sitting on the sidelines.

AUDUSD

The AUD/USD on Monday formed a shooting star after an attempt to rally. The negativity of the shooting star is making us feel that the market might breakdown and that too significantly. At the moment, we are in the position to sell short term rallies due to the minor support that we see below. In the present market, long positions are not to be touched.

USDJPY

The USD/JPY on Monday closed with a shooting star after a failed attempt to rally. The move was a reflection to some degree of US stock markets which the pair is known to follow.the initial rally that we referred earlier was lost due to the sellers that stepped in later and took the market lower. Shooting star that we saw is a signal that the market is going to breakdown and if that happens, we might revisit the116 level.

Most Active Forex Pairs of the day & Technical Analysis

GBPUSD

The GBP/USD pair rallied during the initial hours on Monday, but took a U-turn and formed a negative candle. We have a negative omen with the shooting star appearing at the bottom of the down trend and as a result, we arrive at the conclusion that any break down below the bottom of the range will continue to push this market down towards 1.45 level. We are not entering long position until we are above the 1.50 level, Which seems highly unlikely in the present scenario. 3 Days Free  Trail Signals

EURUSD

The EUR/USD pair got whipsawed on Monday and generated an outside day with a closing below the previous days low. The exchange rate felt the heat due to pressure despite a minor increase in the Eurozone manufacturing PMI numbers as the traders grabbed US dollar for safety from the rapid decline in the Chinese Equity market. We have a Resistance in the neighborhood of 20-day Moving Average at 1.0918, while a support is present at 1.0780. The MACD(Moving Average Convergence Divergence) indicator is signalling negative momentum.

AUDUSD

The AUD/USD pair slipped on Monday, and checked the depth of the ascending triangle we have been exploiting till now. At the present moment, we are not sure when the buyers might enter, hence our hesitation in taking short positions. Short positions would be tempting if cross 0.71 level and then we might as well enter them the Australian Dollar is not getting any help from the old markets which is an anomaly and as a result a breakdown may occur.

USDJPY

The USD/JPY pair fell during the course on Monday as Asian problems continued to pester. The Chinese lost 7% during their stock market training day, and that would have had people running towards the Japanese yen, due to it being considered a “safety currency” due to the fact its normally used as a proxy for Chinese market.

We fell below to test the 118.50 level that happens to be the bottom of the consolidation for the moth of August; however resistance in the zone forced us to turn back and form a hammer. Hence, we would be taking a long position as soon as we cross the top of the hammer.

On the flip side, if we break down below to118.50 level, that could attract the sellers and things might heat up as we reach the 116 zone. At present we are pitching for the buyers and hope for a upside breakout.

KLCI Market Expected to Trade Sideways in Coming Days, Properties Index Dropped

Market Review for KLCI:

The FBM KLCI index lost 39.14 points or 2.31% on Monday. The Finance Index fell 1.82% to 13902.09 points, the Properties Index dropped 1.69% to 1167.5 points and the Plantation Index down 1.53% to 7503.42 points. The market traded within a range of 34.52 points between an intra-day high of 1687.89 and a low of 1653.37 during the session. 3 Days Free Trial Signals

The KLCI extended its midday losses by ending lower 1653.37 points amid overnight losses in Wall Street. The performance of our local bourse was in tandem with most of our regional peers.

Market forecast for KLCI:

The KLCI market is expected to trade sideways in coming session, however if it breaks the level of 1650 with strong bearish sentiments followed by the dropping market volume then it may test the level of 1630 in near term.

KLCI COUNTER SPECIFIC NEWS :

• SKB Shutters Corp Bhd is projecting growth for the 2017 fiscal year, driven by its new insulated fire shutter and insulated fire rated steel door products.
• Penang’s construction industry is expected to stay flat this year with a value of about RM6.8bil, which is almost the same as in 2014.
• Ekovest gained six sen to RM1.13. It is linked to Tan Sri Lim Kang Hoo since his brainchild Iskandar Waterfront Holdings (IWH) makes up part of the consortium that won the Bandar Malaysia bid from 1Malaysia Development Bhd (1MDB).
• Petronas Dagangan fell 20 sen to RM24.66 with 400 shares done while Petronas Chemicals was down 11 sen to RM7.16 with 200 shares traded.
• CIMB Equities Research said integrated environmental engineering and technology provider Cypark Resources core net profit for the financial year ended Oct 31, 2015 made up 96% of its full-year forecast.

GLOBAL FACTORS AND WORLD INDICES:

• Asian stock markets tumbled while safe haven assets and oil prices jumped Monday in the first full day's trade of 2016 as a flare-up in tensions between Iran and Saudi Arabia raised concerns about the volatile Middle East.
• China's benchmark CSI300 share index tumbled 7 per cent on the first session of 2016 on Monday, prompting the stock exchange to halt trading for the rest of the day.The "circuit breaker" suspension mechanism first came into effect on Monday.Stocks slumped after weak factory activity surveys soured hopes that the world's second-largest economy will enter the new year on better footing, and selling intensified throughout the day.
• Hong Kong stocks posted their biggest fall in three months on Monday, marking a gloomy start for 2016, pulled lower by slumping mainland shares and weak global markets.The Hang Seng index fell 2.7 per cent, to 21,327.12, registering its biggest one-day per centage fall since Sept. 29.
• Australian shares fell on the first trading day of 2016 as a sell off in Chinese equities dampened risk sentiment, though gains in energy and healthcare shares capped losses.The S&P/ASX 200 index dipped 0.3 per cent or 16.85 points to 5,279.0 , on disappointing factory activity surveys in China.
• The Singapore economy grew at a better-than-expected 2.0 per cent on a year-on-year basis in the last quarter of 2015, advanced estimates show, and is expected to register a full-year growth of 2.1 per cent in 2015.The growth was a clip faster than the third quarter's 1.8 per cent, and on a quarter-on-quarter seasonally adjusted annualised basis, the economy expanded at a faster pace of 5.7 per cent compared to the 1.7 per cent growth in the preceding quarter.
• China's factory activity contracted for the 10th straight month in December, and at a sharper pace than in November, a private survey showed, dampening hopes that the world's second-largest economy will enter 2016 on steadier footing.The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2 in December, below market expectations for a slight pick-up to 49.0 and down from November's 48.6.
• China's yuan weakened against the dollar at its open on Monday after the central bank set the guidance rate at a more than 4-1/2-year low.Prior to market open, the People's Bank of China set the yuan midpoint rate at 6.5032 per dollar - its lowest level since May 2011, 0.15 per cent weaker than the previous fix of 6.4936.
• Oil prices jumped over 2 per cent in the first trading hours of 2016 as relations between Middle Eastern rivals Saudi Arabia and Iran deteriorated following Riyadh's execution of a prominent Shi'ite Muslim cleric.Global oil benchmark Brent climbed over 2.5 per cent and more than a dollar.
• Gold and silver climbed on the first trading day of 2016 as rising tension between Saudi Arabia and Iran spurred a return to haven assets.Bullion for immediate delivery rose as much as 0.9 per cent, for its biggest gain since Dec 21. The metal lost 10 per cent in 2015 for a third annual drop, the longest slump since 2000.