As indicated by A, the KLCI tested the Bollinger Middle Band on Monday, but remains resisted by the Bollinger Middle Band, ended the day 6.87 points lower. Therefore, this suggests that the Bollinger Middle Band dynamic resistance remain intact. Meanwhile, since the Bollinger Middle Band level is also the 1089 resistance level, it would have strengthen the resistance for the KLCI, and therefore, the KLCI ended lower despite the rebound in other Asian markets. Nevertheless, support for the KLCI remain at 1065 followed by the 1035 WinChart Automatic Fibonacci Retracement.

As shown on the chart , the Bollinger Bands Width contracted another 3%, suggesting that the KLCI is still consolidating. If the KLCI should break above the Bollinger Middle Band, the immediate outlook for the KLCI would improve.

As indicated by B, total market volume declined 9.8% on Monday, and as a result, the market volume is still below the 40-day VMA level. This still suggests that the overall market participation is low. Generally, if the KLCI should consolidate with the volume below the 40-day VMA level, it is considered as normal. However, if the KLCI should break the resistance, volume above the 40-day VMA level is a must to confirm the break out.

As circled at C, the Stochastic ended lower and returned to below the 30% level, which is the short term bearish region. This suggests that the short term movement for the KLCI is still weak. Nevertheless, readers are advised to monitor the Stochastic for if the Stochastic should break out above the 30% level, it would be a signal suggesting an improvement in the short term movement.

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