Composite Index Daily Analysis 26/04/05 

KLCI on Tuesday, 26/04/05, managed to close above the T1 of the down trend channel after yesterday’s pullback. Therefore, T1 serves as a very important dynamic support for KLCI. For the day, KLCI closed at 872.43 point, rose 0.45 or 0.1%. 

Currently, the dynamic supports are located at T1, and 10 days Bollinger Band Middle Band, in addition, the WinChart automatic Fibonacci Retracement at 859.81 point. As for the resistance, it is still the WinChart Automatic Fibonacci Retracement at 878.96. (Refer to A) 

Volume traded for KLCI on Monday remained below the 40 days Volume Moving Average (VMA), thus, in our opinion, not sufficient to support any rally. Nevertheless, it is normal to see a relatively low volume during a consolidating phase, for KLCI is moving side-ways at the moment. (Refer to B) 

10 days Bollinger Band contracted 15%, indicating that the current volatility is very low. During a side-ways market, Bollinger Band, in our opinion, is a very appropriate device to identify the next move. Therefore, readers are advised to pay attention to Bollinger Band’s band width. If the Bollinger Band opens wide with the price above the middle band, we shall see more upside moving, and vise-versa. 

As shown in C, RSI hovering at the 50% level in the neutral zone, giving no specific signals. Nonetheless, readers can perceive this as a sign of preparing for the next move, and it pays to combine the Bollinger Band with other secondary indicators to confirm it, either up or down.

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