TELEKOM MALAYSIA BHD

Telekom Malaysia broke out of RM3.06 on Friday. The technical charts are showing positive signs of further strength.

Firstly, the ADX value is increasing and approaching the 30 level. +DI is above the –DI indicating development of strong up trend.

The Force index is also showing pockets of strength.

RSI is starting to tick up after testing the 50 level indicating that buyers are once again stepping in again.

MACD indicator is slightly above its signal line. Price momentum is likely to continue if the MACD indicator can stay above its signal line for the next few trading days.

All bets are off if price breaks below RM2.85 level.

KLCI Updates

KLCI index closed at 1184 points on Friday, the highest since June 30, 2008. The question now is whether this uptrend will continue or will we see a down swing that will take out the lows made in March 2009.

The index is now above its 50, 100 and 200 day moving average. And all three moving averages are increasing. This shows the strength of the current up move.

The MACD indicator is moving down and looks set to cut its signal line. If the crossover occurs, it will mean weakness in the short term. However, given the fact that the index is still above its up trend support line, “Bullish” investors are still in safe territory.

Dow Inverse Head And Shoulder

Stock market has rallied across the board. The Dow Industrial Average is now above 9000 level. The index is currently at Jan 2009 level.

Technically, the charts are looking better. Just a few weeks ago, there was a possibility of a sell-off based on the head and shoulder pattern. That did not materialize. And when the pattern failed, the market rallied. The reverse seems to be happening. An inverse head and shoulder is now in the picture.

The ADX chart is showing the development of an uptrend, with +DI above –DI and ADX moving towards 30 levels.

MACD is indicating a bullish trend as well with the indicator above its signal line.

RSI is now at overbought levels but it an uptrend situation, market can stay at overbought levels for longer periods.

Based on the monthly charts, the 50% Fibonacci retracement level is at 9176 and 61.8% retracement level is at 9825 level. Market needs to scale these 2 levels for up move to continue.

Let’s see if the market is able to stay above 9000 level next week.

Happy trading!