Composite Index Daily Technical Analysis, 06/05/05 

As mentioned on our last two days’ analysis, the pull-back effect of KLCI had indeed occurred. For the day, KLCI gave up 2.84 points (-0.3%). Once again, KLCI daily candle had a long lower shadow, indicating that the sentiment for the day was varied. Nevertheless, from technical analysis point of view, the target of the pull-back effect of KLCI is at around the 10 days Bollinger Band Middle Band. 

Currently, KLCI has a resistance at L1, which is around 906 points. As shown on the chart above, L1 was once a support point for KLCI, since breached; L1 has converted its role to resistance. Mean while, 10 days Bollinger Band Middle Band is the current dynamic support, and WinChart Automatic Fibonacci Retracement at 890.80 point is an additional support. 

Due to the pull-back effect, volume traded for KLCI was slightly retreated 16.7%. This is a normal reaction during a consolidation or correction phase, which volume is usually slightly decreased. Needless to say, if KLCI were going to continue its upward movement, the amount of volume traded above the 40 days VMA is imperative. (Refer to B) 

As indicated in C, RSI retreated slightly for the day, but still managed to stay above the 70% level, mid-term bullish zone. If RSI breaks below the 70% level, any upward movement of KLCI is highly questionable. As for MACD, MACD histogram suggests a minor correction of KLCI. The minor correction is further confirmed when we see a clear “round-top” of the histogram. (Refer to D)

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