KUALA  LUMPUR (Aug 14): The FBM KLCI is expected to continue its uptrend today in line with the overnight revival at most global markets.

Shares revived and bond yields rose in major markets on Thursday after China's central bank reassured investors there was no reason for its currency to keep falling, according to Reuters.

Despite the renewed calm in markets, the yuan weakened for a third day and some forecast further declines in the face of a weak economy, even as People's Bank of China Vice-Governor Yi Gang dismissed talk of a deeper devaluation, it said.

AllianceDBS Research in its evening edition Thursday said despite the weak down close in the preceding day, the FBM KLCI had on August 13 traded within the previous day’s range to form an inside day bar as market participants changed their game play from selling to buying in anticipation of a technical rebound.

The research house said that in the absence of stronger selling interest, the benchmark index was in the green throughout the trading sessions before settling near the day’s high at 1,621.62 (+11.69, +0.73%).

“In the broader market, gainers outnumbered losers with 714 stocks ending higher and 217 stocks finishing lower. That gave a market breadth of 3.29 indicating the bulls were in control,” it said.

AllianceDBS Research said the selling pressure came to a “halt” on August 13.

“The ability of the benchmark index to stay above the 1,600 level after a negative opening saw the emergence of risk taking buying interest after the market lost a whopping 142 points [1,744 (Augt 3) minus 1,603 (August 12] in the last 7 straight days.

“The inside day bar setup was on time to avoid further deterioration of market sentiment.

“Following the strong up close, the market is expected to a test higher level again with an immediate hurdle at 1,635. However, be prepared for a volatile market in the coming days as market participants which missed the selling opportunity earlier would be looking to sell into minor rally,” it said.  

The research house said a crossover of 1,635 should see a test of next resistance zone of 1,656 – 1,660.

It said that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on August 13 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,626.86 level on August 14,” said AllianceDBS Research.