Taiwan share prices are expected to face some pressure next week, with strong resistance at the key 7,800 points level amid concerns over movements on Wall Street and regional markets, dealers said.
They said investors are nervous about the possible fallout from a weakening US housing market after a rise in US mortgage defaults rattled global markets earlier this week.
Investigations into alleged insider trading involving cell phone and notebook computer maker BenQ and an affiliate of memory chip producer Powerchip Semiconductor have made many investors cautious towards the bellwether electronic sector, they added.
One positive is that liquidity remains high, serving as a support, they said, putting next week's trading range at between 7,600 and 7,800 points.
For the week to March 16, the weighted index closed up 151.60 points or 2.0 percent at 7,719.80 after a 0.81 percent gain the previous week. Average daily turnover stood at 110.52 billion dollars (3.35 billion US), compared with 113.43 billion dollars a week ago.
"The performance of overseas markets dictated and could continue to dictate local shares. Without a clear sign of stabilising abroad, in particular on Wall Street, the local market is expected to consolidate in the near future," President Securities analyst Johnny Lee said.
Ahead of the US Federal Reserve meeting, which ends Wednesday, investors are likely to opt for caution given current concerns about the US economic outlook, dealers said. Huang Hsun-hui, an analyst with Capital Securities, said the 2.0 percent gains this week were really just technical in nature, as the market has not ridden out the current consolidation yet.
"Although the market closed above 7,700 points Friday, it remains technically weak and is likely to fall below that level anytime soon if negative leads emerge," Huang said.