Kuala Lumpur Stock Index futures

Kuala Lumpur Stock index futures: Turn long/Sell stop at 1368.0 OL
June futures closed higher by 26.5 point at 1384.00 on relatively high volume of 6,960 lots.

1. FKLI leapt by another 26.5 points to close outside the upper Bollinger band, at 1384.

2. This is a strong buy signal. We have turned long at 1362.0 and we are maintaining longs.

3. Place sell-stop at 1368.0 OL.

4. We expect a strong rally today to “flush” out heavy shorts.

5. We should continue to see sharp rallies for now, until FKLI hits at least 1466.

6. Thereafter we will look for a toppish Japanese candlestick pattern to exit and maybe
even short.

7. For now, expect the “shorts” to be slaughtered!

8. Upside Wave 5 target is 1466. After that we look for a toppish Japanese candlestick
pattern before shorting.

General commentary: Finally, we have an upside breakout of a consolidation, exactly as we had anticipated. This consolidation started at least from April 5 and is therefore a 2½-month consolidation. As such, now that it is seen breaking out – you can expect a powerful rally. Shorts beware! Expect FKLI to hit 1466.

Upside Fibonacci target 1466(Revised on June 15)
Downside targets: 1294/1257/1212

Ichimoku chart: (Based on Kumo (clouds) FKLI is still long. Kumo support is at 1206. Ichimoku chart will turn short at 1205 OL) (Updated on June 11, 2007).

Average True Range for KLFE: A.T.R. is 19.54 points for FKLI futures. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

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