As indicated by A, the KLCI is again pulled down by negative economic news around the globe while continues its narrow consolidation. The KLCI tested the 887 resistance but failed to break above this resistance. Therefore, the 887 resistance remains intact while the support is still at 800 points.

As shown on the chart above, the Bollinger Bands Width is still narrowing, suggesting the consolidation of the KLCI continues. But still, since the Bollinger Bands Width is now very narrow, it implies that the consolidation is near its end. With the KLCI staying below the Bollinger Middle Band, the immediate outlook for the KLCI is on the bearish biased, if the Bollinger Bands Width should expands.

As indicated by B, total market volume declined another 10.9% on Tuesday, with volume below the 40-day VMA level. This shows that the market participation is relatively low as investor are still on the sidelines. Still, from the technical analysis stand point, it is considered normal to see lower volume during a sideways consolidation. If the KLCI should attempt to break above the resistance line, more volume is need to confirm the breakout. However, if the KLCI should start falling with high volume it would means an increase of selling pressure, thus further dampen the market sentiment.

As circled at C, the Stochastic is still below 30% level, which is the short term bearish region. Therefore, the market movement for the short term is still bearish biased, unless the Stochastic could break above 30% level successfully.

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