As indicated by A, the Bollinger Bands Width expanded 10%, with the KLCI situated below the Bollinger Middle Band, closing 19.86 or 2% lower on Monday, and breaking below the 1000 psychological mark. Nevertheless, the KLCI is now temporary supported by the Bollinger lower band. Support for the KLCI is at 963 WinChart Automatic Fibonacci Retracement while the resistance are at the Bollinger Middle Band followed by the 1011 WinChart Automatic Fibonacci Retracement.

As shown on the chart, the Bollinger Bands Width only started to expands, and it is considered as an early stage of the signal. If the KLCI should rebound in the near term, the consolidation is likely to continue, thus reducing the risk of continuation of the downtrend. However, with negative sentiment across the globe, the KLCI is likely to be affected by the regional markets.

As indicated by B, total market volume increased 26% on Monday, and breaking above the 40-day VMA level. This suggests some bargain buying activities as the KLCI is falling. However, as the KLCI is still falling, these bargain are likely to be speculative.

As circled at C, the Stochastic fall from 70% level to below 10% level, again, this signal might be too sensitive as the KLCI is basically still consolidating. Therefore, the priority of the analysis should still be on the primary indicator like the Bollinger Bands. Nevertheless, if the Stochastic should remain below 30% level, the short term market movement for the KLCI is likely be bearish biased.

To sum up, the expansion of the Bollinger Bands Width is suggesting a beginning of a new movement, and the KLCI staying below the Bollinger Middle Band is generally a negative signal. If the Bollinger Bands Width should expands further, the risk of further downside movement would increased.

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