Jakarta, CNBC Indonesia – The Jakarta Composite Index (JCI) strengthened 0.58% to 5,371,472 in Thursday’s trading. This performance marked the strengthening of the JCI in 4 consecutive days, aka this week. If today, Friday (28/8/2020) strengthens again, the JCI will once again record a perfect week, repeating the achievements of 2 weeks ago.
If you look back, the JCI has now strengthened in 13 out of 15 trading days, with a total percentage of 7.3%.
The news from BUMN Minister Erick Thohir succeeded in making market players happy. Erick said, the estimated Covid-19 vaccine that could be obtained in 2021 was 340 million. This amount is an accumulation of the results of the production of vaccines in cooperation between Indonesia and Sinovac China and G42 from the United Arab Emirates (UAE).
“So if we collect from the 2 collaborations between the UAE and China, we will get 30 million vaccines in 2020. If one person needs 2 doses, then 15 million people will be vaccinated by the end of 2020 if the clinical trials run well. Meanwhile in 2021 we will still arranged, there are 290 million to 340 million, “said Erick in a joint meeting with Commission IX DPR RI, Thursday (27/8/20).
Meanwhile from abroad, the chairman of the US central bank (The Fed) Jerome Powell, who changed his approach to the inflation target, made investors even more excited. Previously, the Fed set an inflation target of 2%, when it approached it, the most powerful central bank in the world would normalize its interest rates, aka start raising interest rates.
The Fed is now implementing an “average inflation target” which means that it will allow inflation to rise above 2% higher “moderately” for “some time”.
With an “average inflation target” Powell said low interest rates could be held on for much longer to help an economy that is experiencing a recession due to the Covid-19 pandemic.
The change in policy sent US stock exchanges higher, the S&P 500 index once again setting an all-time high. The strengthening of the direction of world stock exchanges certainly sent positive air to the Asian market today, including the JCI.
Technically, JCI managed to break the 5,350 level yesterday, the closest target is now at 5,390. If it is successfully passed, the Indonesian market has the opportunity to reach 5,458 which is 61.8% Fibonnaci Retracement.
JCI continued to advance after breaking through the 5,163 level which was 50% Fibonnaci Retracement on Tuesday (11/8/2020) 2 weeks ago. The fiber pulled from a September 2019 high of 6,414 to this year’s weakest level of 3,911 on the daily chart.
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Graphic: Daily IHSG Foto: Refinitiv- – |
Fib. This 50% retracement is a strong resistance, so that when it is broken convincingly it will provide strengthening momentum.
The Stochastic indicator on the daily chart has entered the overbought area (overbought) which could weigh on the upward movement of the JCI.
Stochastic is a leading indicator, or indicator that initiates price movements. When Stochastic reaches the territory overbought (above 80) or oversold (below 20), then the price of an instrument has the opportunity to reverse direction. This means when it reaches overbought or oversold, JCI is at risk of weakening or has a chance to strengthen.
 Graph: IHSG 1 HourFoto: Refinitiv- – |
Sometimes if the momentum is strong, Stochastic can be stuck in the overbought area for quite a long time, but we must also pay attention to the risk of correction due to the overbought condition.
While looking at the hourly chart, the stochastic indicator has not entered the overbought area. So that the room for JCI strengthening is wide open.
The 5,350 area is now the closest support, as long as it stays above it, JCI will likely continue to strengthen towards 5,458.
Meanwhile, if the support is broken, JCI is at risk of a correction to 5,320 to 5,300.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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