On Monday, the KLCI opened gap down, but managed to close higher, up 2.41 points at 884.06 points. Still, the KLCI failed to break above the 887 WinChart Automatic Fibonacci Retracement resistance. Support for the KLCI remains at 800 mark.

As shown on the chart, the Bollinger Bands Width is still contracting with a rather narrow Bollinger Bands Width, this implies that the consolidation is near its end, and the KLCI is about to break out from its consolidation. Again, if the KLCI should remain below the Bollinger Middle Band as the Bollinger Bands Width expands, it would be a bearish signal for the KLCI.

As indicated by B, total market volume declined another 20.5%, and as a result, the volume is now below the 40-day VMA level. This shows that the market participation is relatively low, as investors are mostly on the sidelines. However, it is rather normal to have lower volume during a consolidation of the KLCI.

As circled at C, the Stochastic remains below 30% level, which is the short term bearish region. As long as the Stochastic is still below 30% level, the short term bearish movement is expected to continue, until a valid break out above the 30% level.

In short, the market direction of the KLCI is still unclear, and we will still have to wait until the Bollinger Bands Width expands to determine the direction of the next 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