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IHSG Weekly Outlook: Testing the Upper Channel as Momentum Weakens
Market Overview
The Indonesia Composite Index (IHSG) has maintained a broad uptrend structure for nearly a decade, supported by the nation’s resilient macroeconomic backdrop and continued investor appetite for domestic equities. Since 2015, the index has moved within a long-term ascending channel, establishing higher highs and higher lows across major cycles.
However, as of late October 2025, IHSG is testing a critical inflection zone near the upper boundary of this long-term channel, positioned between 8,200 and 8,300. The market has shown hesitation around this area, with several sessions of profit-taking emerging after briefly touching the upper resistance line.
While the broader trend remains constructive, early signs of momentum loss are becoming visible on key technical indicators such as the MACD and Stochastic RSI, suggesting that the index may be entering a short-term cooling phase following its strong multi-month rally.
Long-Term Structure: The Channel That Defines the Trend
A glance at the weekly chart reveals that IHSG has been respecting a well-defined ascending channel since 2015. Each cycle low—seen in 2015, 2020, and 2023—was followed by an upward recovery that consistently brought prices back toward the upper channel resistance.
This channel not only defines the market’s long-term bullish rhythm but also serves as a visual gauge for potential overextension. Every time IHSG approached the top boundary, a period of consolidation or technical correction followed. The most recent move is consistent with this historical pattern: as the index touched the upper channel near 8,300, selling pressure started to emerge, indicating that investors may be locking in profits after a prolonged advance.
From a structural perspective, the primary uptrend remains intact. The support zone around 7,700–7,800 marks the midline area and is crucial for maintaining bullish momentum. A weekly close below this support could trigger a deeper retracement toward the lower band of the channel around 7,300–7,400.
As long as IHSG stays above 7,700, the medium-term outlook remains positive, but the index is now at a stage where upward progress may become more gradual and selective.
MACD: Momentum Losing Steam
The Moving Average Convergence Divergence (MACD) indicator, a key measure of market momentum, remains in the positive territory but is showing the first signs of softening. The histogram bars, which measure the difference between the MACD line and its signal line, have started to narrow. This suggests that bullish momentum, while still present, is fading in strength.
Historically, similar MACD slowdowns on the weekly timeframe have preceded sideways phases or corrective waves lasting several weeks. If the MACD line crosses below its signal line in the coming sessions, it would confirm a bearish crossover, increasing the probability of a short-term pullback.
At this stage, it’s not an outright reversal signal, rather, a warning that the rally is maturing. For swing traders and portfolio managers, this is typically a period to scale back aggressive long positions, lock in partial profits, and reassess exposure to sectors that have already priced in strong earnings growth or macro optimism.
Stochastic RSI: From Overbought to Cooling Down
The Stochastic RSI, another key momentum oscillator, reinforces the message of caution. After spending several weeks in the overbought region (above 80), the indicator has now turned downward, a signal that short-term buying pressure is easing.
This transition from overbought levels often marks the start of a consolidation phase within an ongoing uptrend. It doesn’t necessarily imply a bearish reversal; instead, it reflects market rotation and profit-taking as investors reallocate capital across sectors.
Given the index’s long rally since early 2024, it would be natural for IHSG to pause and digest its gains. Historically, such pauses have served as a foundation for the next leg higher once momentum stabilizes and valuation pressures subside.
Key Support and Resistance Levels
At this juncture, market participants should closely monitor three critical levels on the weekly timeframe:
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Resistance: 8,200 – 8,300 → This upper boundary of the long-term channel has repeatedly capped rallies since 2018. A sustained weekly close above 8,300 would signal a major breakout and could unlock a potential upside toward 8,700 or higher over the medium term.
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Primary Support: 7,700 – 7,800 → This zone marks both the midline of the channel and a strong historical base of prior consolidations. As long as the index holds above this level, the long-term structure remains bullish.
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Secondary Support: 7,300 – 7,400 → In case of a technical correction, this area serves as the next key demand zone. A drop below this level would likely shift the medium-term sentiment to neutral, suggesting a more prolonged consolidation phase.
These zones form the technical framework that traders can use to manage risk and position sizing, particularly during periods of increased volatility.
Trading Strategy: Managing Exposure Near Resistance
As IHSG approaches the upper boundary of its long-term channel, traders face a crucial decision point between maintaining positions for potential breakout or taking defensive action ahead of a possible pullback. The current structure on the weekly chart favors a tactical and disciplined approach, especially as momentum indicators begin to flatten.
For swing traders, the key strategy at this stage is position reduction and selective profit-taking. Since the index is trading near resistance (8,200–8,300), the probability of short-term volatility increases. Reducing exposure helps preserve capital while still maintaining participation in the longer-term uptrend.
If IHSG confirms a bearish crossover on the MACD or if weekly closes occur below 7,800, traders may consider tightening stop-loss levels or hedging exposure through defensive sectors or ETFs. Conversely, if the index manages a strong weekly close above 8,300, it would confirm a channel breakout, providing an opportunity to re-enter momentum positions with a defined stop at 8,100.
For long-term investors, this is a period to rebalance portfolios rather than chase new highs. A measured approach—accumulating quality stocks during minor pullbacks, often yields better risk-adjusted returns than buying strength near the top of a channel.
Risk Management: Protecting Gains in a Late-Stage Rally
At the current stage of the cycle, risk management becomes as important as direction forecasting. The index has rallied significantly since its 2023 lows, and many traders may already be holding profitable positions. Preserving these gains requires proactive planning.
One practical approach is to implement a tiered stop-loss strategy. For example:
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Short-term traders can set dynamic trailing stops 2–3% below weekly support levels to protect recent gains.
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Medium-term swing traders may keep a wider buffer near the 7,700 zone, which aligns with the mid-channel support.
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Long-term investors should focus on the broader structure, adjusting exposure only if the index breaks below 7,300, signaling potential trend deterioration.
Another key element of managing risk is avoiding emotional reactions during brief pullbacks. In long-term uptrends, corrective waves are normal and often necessary to reset market conditions. Traders who maintain a structured plan—identifying entry points, exit targets, and risk tolerance, tend to perform better over multiple cycles.
Finally, liquidity management is crucial. As the market becomes technically overextended, it’s wise to maintain partial cash positions to capitalize on future dips. Having dry powder available allows traders to respond, not react, when volatility spikes.
Conclusion
IHSG continues to move within a long-term ascending channel, confirming that Indonesia’s equity market remains structurally bullish. However, as the index trades near its upper resistance zone (8,200–8,300), technical signals suggest a potential pause in momentum.
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The MACD remains positive but shows declining histogram bars — a sign of slowing momentum.
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The Stochastic RSI has turned down from overbought territory, signaling cooling short-term sentiment.
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Key support lies at 7,700–7,800, with deeper support near 7,300–7,400.
Overall, IHSG remains healthy within its channel, but traders should recognize that the market is entering a zone of caution. Swing traders may consider reducing exposure or taking partial profits, while long-term investors can use any pullback toward 7,700–7,400 as a potential re-entry zone for accumulation.
In summary, the broader uptrend remains intact, but the risk-to-reward balance has shifted. The next few weeks could be defined by consolidation or a mild correction before a new wave of directional clarity emerges.
Disclaimer:
This analysis is for informational and educational purposes only. It does not constitute financial advice, investment recommendation, or solicitation to buy or sell any securities. Market conditions may change without notice. Always conduct your own research or consult a qualified financial advisor before making investment decisions.
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