JCI.. Prepare for a little correction..

The Jakarta Composite Index (JCI) has gained around 13% this month. Is this rally could be maintained?


There is a strong resistance around 1440 level that has to be passed to maintain this strong rally. The index has failed to pass this level on early January this year. If we look at the stochastic indicator, we would conclude that obviously the index is in an overbought condition. It has risen for 5 days in a row therefore I would expect a little correction in a next few days. In my view, the index would be in a range of 1350 - 1470 this week.

While IDR is still in a good shape against the USD at 11400 per dollar, I would expect that the rally could be maintained in a medium term. My concern is while we are approaching the presidential election some traders would take a safer position so I am expecting there would be some liquidation in the near future. I expect the index not to pass the important resistance at 1440 level this week or two but in the medium term this rally positively could be maintained.