As indicated by A, although the KLCI ended slightly higher on Wednesday, it is still below the Bollinger Middle Band dynamic resistance. This shows that the immediate outlook for the KLCI is still on the weaker side.

As shown on the chart, the Bollinger Bands Width contracted 11%, suggesting the volatility of the KLCI is still declining, thus a signal of a consolidation. Meanwhile, as the KLCI consolidate, the direction of the KLCI shall remains unclear, until a re-expansion of the Bollinger Bands Width, and the new direction of the KLCI will be determined by the position of the KLCI above or below the Bollinger Middle Band.

As indicated by B, total market volume increased 4.9%, but still below the 40-day VMA level. This shows that the overall market is still relatively quiet as the market sentiment is generally weak. Again, it is usually normal to see lower volume as the KLCI is consolidating. However, if the KLCI should attempt to break its resistances, volume above the 40-day VMA level is need to confirm any breakouts.

As circled at C, the Stochastic continue to rebound after touching 0% level, as a rebound after the KLCI was over-sold. If the Stochastic should break above 30% level, it would break away from the short term bearish region.

In general, the downtrend of the KLCI (T1 and T2 channel) is still in place, and for the moment, we still have to wait until a clearer signal from the Bollinger Bands Width to see if there is any chances for the KLCI to break away from the downtrend.

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