Composite Index Daily Technical Analysis, 20/06/2005

KLCI closed mixed and continued technical correction on Monday. 10 days Bollinger Bands contracted 15%, indicating that the current market volatility is low. KLCI is still resisted at 899.89 points of the WinChart automatic Fibonacci Retracement, while support is still at 890.20 points of the WinChart automatic Fibonacci Retracement. (Refer to A)

            Total market volume had retreated another 1.4%, staying below the 40 days volume moving average (VMA). Again, it is rather normal to have a lower volume during a consolidation. However, if KLCI were going to have a second round rally, volume above the 40 days VMA is imperative. (Refer to B)

            As indicated in C, MACD histogram continued the technical correction signal. Therefore, technical correction shall continue until we see a clear “round-bottom” signal. Users and readers are advised to take note that a technical correction does not necessary means a down fall for KLCI, in fact, a side-ways movement is the best correction for it provides the market a chance to build a firmer base. (Refer to C).

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