Jakarta, CNBC Indonesia – The Composite Stock Price Index (JCI) fell 0.13% over the past week to the level of 5,143.893, even though it had broken through the “thick wall” aka strong resistance of 5,163.
The issue of recession was one of the main drivers of the JCI over the past week, and will still have an effect at the beginning of this week, Monday (10/8/2020).
Many sentiments will affect the JCI movement today. From externals, the release of US labor data showing the economic revival last Friday, as well as US President Donald Trump who signed 4 executive orders including the provision of Direct Cash Assistance (BLT) worth US $ 400 per week last Saturday will only be responded to today. .
However, apart from positive sentiment, there is also negative, namely the US-China relationship which is heating up again.
Meanwhile from within the country, current account data (current account) Indonesia in the second quarter of 2020 will be a concern.
In the last quarter, the current account deficit (CAD) improved.
The deficit was recorded at US $ 3.9 billion, equivalent to 1.4% of the Gross Domestic Product (GDP). This is the lowest record since 2017. CAD has been a “ghost” for the Indonesian economy, and is slowly starting to be driven out. Since 2011, Indonesia’s current account has never felt a surplus, always a deficit.
The current account is part of the balance of payments which describes the supply of foreign exchange from exports and imports of goods and services. Foreign exchange from this post is considered to be of more long-term dimension than from the next room, namely capital and financial transactions.
CAD in the second quarter is likely to improve again considering that in May and June Indonesia’s trade balance experienced a surplus.
Technically, the JCI was corrected at the end of last week and returned to below the level of 5,163 which is 50% Fibonnaci Retracement so that it becomes strong resistance. The fiber pulled from a September 2019 high of 6,414 to this year’s weakest level of 3,911 on the daily chart.
Graphic: Daily IHSG
That level is the key to movement today.
Looking at the 1 hour chart, the stochastic indicator has come out of the overbought area (overbought). The stochastic reaches overbought last Friday triggered a technical decline in the JCI.
Stochastic is leading indicator, or indicators that initiate price movements. When Stochastic reaches the overbought area (above 80) or oversold (below 20), the price of an instrument has a chance to reverse. Meaning when it reaches overbought or oversold, JCI is at risk of weakening or has a chance to strengthen.
Graph: IHSG 1 Hour
The correction target to 5,125 in technical analysis last Friday was achieved, even a little deeper. Now JCI is near the level of 5,163 again. If breached convincingly, JCI has the potential to strengthen to 5,190, and further to 5,210.
Meanwhile if stuck below 5,163, JCI is at risk of a correction to 5,125, with further support at 5,100 to 5,080.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)