As indicated by A, the KLCI lost 1.30 points, forming a narrow candlestick, which is a sign of a decelerating of its downtrend; thus, a chance of a consolidation for the KLCI. Support for the KLCI is at 960 WinChart Automatic Fibonacci Retracement while the resistance is at 1008 WinChart Automatic Fibonacci Retracement (23.6% Fibonacci Retracement).

As shown on the chart, the Bollinger Bands Width expanded 20%. If compared with the previous expansion rate of 60%, Thursday's expansion is relatively smaller. If the Bollinger Bands Width should starts to contract, it would be a signal suggesting a consolidation for the KLCI, and the KLCI is likely to rebound and re-test the Bollinger Middle Band, which is usually the first target of a technical rebound.

However, the Bollinger Middle Band is also the dynamic resistance for the KLCI. In other words, breaking above the Bollinger Middle Band is not going to be easy, unless the KLCI is supported with positive sentiment. If the KLCI should break above the Bollinger Middle Band successfully, it is possible to end its downtrend.

As indicated by B, total market volume declined 24.5%, but still above the 40-day VMA level. This suggests that the overall market is still widely participated, and if volume should remain above the 40-day VMA level as the KLCI rebound, it would help listing the market confident, thus a crucial element for the KLCI to break above the downtrend.

As circled at C, the Stochastic is now below 30% level, which is the short term bearish region. As long as the Stochastic is still below 30%, the short term bearish movement for the KLCI 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