Sunday 23 February 2014
FKLI
- Stay long above 1,820 pts. The positive response that was anticipated following the white candle of 19 Feb did not materialise yesterday. Instead, the index opened lower and continued to decline over the day, closing near the day’s low and leaving a black candle. Nonetheless, we are still maintaining the positive outlook, as the ability to hold above the 1,820-pt support level shows that buyers are not overwhelmed just yet. The gap of 17 Jan is still left uncovered too, which is an encouraging sign.
Thus, the buying support is seen as intact as long as the index stays above 1,820 pts, near 17-19 Feb’s low. It is better that the index gets above 1,830 pts, which will send it above yesterday’s candle, as that should erase any doubt on the strength of the upward bias. This may lead to a test of 1,835 pts, near 19 Feb’s high and strong resistance is at 1,840 pts, near the highs of 8 and 15 Jan. A violation of the latter will extend the rebound that started after the white candle of 6 Feb. The weakness will, however, gain traction if the index closes below 1,820 pts. This will leave it below the 50-day MAV line and selling will intensify further if the 1,812-pt level, near 14 Feb’s low, is violated. This should lead to a test of the strong psychological 1,800 pts, where a violation may reignite the downward pressure that started off 2 Jan’s “Long Black Day”.
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