As indicated by A, due to our local as well as the rising of crude oil prices again, the KLCI opened gap down on Friday. The gap on Friday suggests some panic selling. As shown on the chart above, the KLCI also breaks below the T2 line, and therefore, further dampened the market sentiment.

Meanwhile, the Bollinger Bands Width expanded 37%, and the KLCI has been trading below the Bollinger Middle Band ever since 21/05/2008. Therefore, the immediate outlook for the KLCI is still bearish biased, until the contraction of the Bollinger Bands Width, which could suggests a consolidation for the KLCI. Nevertheless, support for the KLCI is at 1128 WinChart Automatic Fibonacci Retracement line, and the resistance is at 1204 WinChart Automatic Fibonacci Retracement line, which is also the 1200 psychological resistance level.

As indicated by B, total market volume increased 22.5% as the KLCI ended further lower. Therefore, the increased of volume suggests some increase of selling pressure. In short, unless the KLCI should rebound in the near term, or else the increase of volume associated with the KLCI falling would suggests a weaker market confidence.

Stochastic is a very sensitive short term technical indicator. It is a best to time monitor the Stochastic at the moment. As circled at C, if the Stochastic should break above the 30% level, it would be a signal suggesting a short term technical rebound. However, if the Stochastic should remain below the 30% level, the short term bearish movement is expected to continue.

Find this analysis useful? Why not share it with others? Click Here to send this to a friend

Straits Index (M) Sdn Bhd
No. 16, Jalan LP 1A / 5, Lestari Perdana,
43300 Seri Kembangan, Selangor
Hotline: (03) 8941 6828  (5 lines)   Fax: (03) 8941 9828    
Email: info@straitsindex.com
© Copyright 1997-2008 Straits Index (M) Sdn Bhd All rights reserved