As indicated by A, the KLCI again trading in an narrow range on Thursday, (forming a small candlestick), suggesting that the KLCI is still consolidating. Therefore, to get a clearer view, we are zooming in to a shorter range, and therefore, the WinChart Automatic Fibonacci Retracement of 1040 is the immediate resistance, while the supports are at 1011 points and 963 WinChart Automatic Fibonacci Retracement.

As shown on the chart, the Bollinger Bands Width is still contracting 21%, thus suggesting a consolidation for the KLCI. If the Bollinger Bands Width should continue to contract, the KLCI is expected to continue its sideways movement until the Bollinger Bands Width re-expands.

As indicated by B, total market volume declined 17.2%, while barely above the 40-day VMA level, suggesting the overall market participation is still sufficient. Nevertheless, this is a positive element for the KLCI if it should attempt to rally. However, if volume should remain below 40-day VMA level, the KLCI is likely to move sideways.

Despite the KLCI moving sideways, the MACD histogram is still rising, suggesting that the KLCI short term movement is still positive. However, if the KLCI should continue its sideways movement, the significance of the MACD signal is reduced. This is true for other secondary indicators. Therefore, if MACD should produce a conflicting signal, we shall refer to primary indicator like Bollinger Bands, Moving Averages, or Chart patterns.

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