Jakarta, CNBC Indonesia – The Composite Stock Price Index (JCI) closed up 0.53% at 6,626.87 yesterday, Thursday (20/1/2022). This strengthening finally occurred after previously slumped for three consecutive days with a percentage of 1.55%.
However, the JCI’s struggle to strengthen again on Friday (21/1) is predicted to be tough. This prediction takes into account the pressure from inside and outside the country.
Domestically, Bank Indonesia (BI) yesterday decided that it would start increasing the Statutory Reserves (GWM) gradually until the end of the third quarter of 2022. This policy will certainly reduce liquidity in banks which will indirectly have an impact on the JCI.
According to BI Governor Perry Warjiyo, the three-fold increase in the Statutory Reserves in 2022, is estimated to draw around Rp 200 trillion of liquidity from the banking system.
This policy can certainly put pressure on the financial sector, especially the banking sector, which has the largest weight in the JCI.
From abroad, the stock market of the United States (US) has not stopped falling. The Dow Jones fell 0.9%, the S&P 500 fell 1.1%, and the Nasdaq led 1.3%. The continued decline in the direction of the world stock exchanges certainly sent negative air to Asian markets today, including the JCI.
Technically, the weakening of the JCI Monday (10/1) formed a Shooting Star pattern which became a signal of a decline in prices. Sure enough, since then the JCI has struggled to strengthen, but has continued to be depressed. Yesterday, the JCI was able to strengthen but was still held back by the 50-day moving average (50/MA 50 moving average) on the daily chart, which is in the range of 6,620 to 6,630.
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Photo: Daily JCI Foto: Refinitiv- – |
As long as the JCI is stuck below it is at risk of falling. Moreover, the stochastic indicator on the daily chart is moving down but has not yet entered the oversold area (oversold).
Stochastic is leading indicator, or indicators that initiate price movements. When the stochastic reaches the region overbought (above 80) or oversold (below 20), then the price of an instrument has the opportunity to reverse direction.
It means when you haven’t reached oversold the risk of falling prices is quite large.
 Graph: JCI 1 HourFoto: Refinitiv – – |
Moreover, the stochastic on the hourly chart to see potential movement in the short term has entered the territory overbought.
Support the nearest is now in the 6,600 range, a break below that level risks lowering the JCI to 6,570, before heading to 6,530.
Meanwhile, if the JCI is able to pass the MA 50, the JCI has the opportunity to strengthen to 6,660 to 6,680, before heading to 6,700.
CNBC INDONESIA RESEARCH TEAM
(pap)
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