Winchart Technical Analysis
Daily Market analysis
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On Tuesday, the KLCI opened gap up closing 21.67 points higher to 1368.72 points. As circled at A, the KLCI is now situated above the 20-day Bollinger Upper Band which suggests that the movement was indeed bullish. However, when the KLCI is totally above the 20-day Bollinger Upper Band, this also implies an over-heating warning, thus the KLCI is likely to have a pull-back as a form of technical correction. However, if the KLCI should remains supported by the rising 14, 21, 31 EMA, the outlook shall remains bullish biased.
Total market volume increased 43.8% on Tuesday, with the volume significantly above the 40-day VMA level. This suggests an increase of market participation or the inflow of fresh capital. Therefore, if the volume should remain above the 40-day VMA level, the market sentiment is likely to be bullish.
As circled at C, the Stochastic is still above the 90% level, which is an over-bought region. This suggests that the KLCI is now over-heated, and there is a risk of a technical correction. However, if after the technical correction and the Stochastic remains above the 70% level, the market movement for the short term would still be bullish biased.
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