As indicated by A, the KLCI had an intra-day high reaching 1050.45 points, but soon it started to give back its gain and ended the day 7.07 points or 0.7% lower. This is because the KLCI is very near its 1053 WinChart Automatic Fibonacci Retracement resistance level as profit taking takes place causing the KLCI to retreat. For the moment, the T2 uptrend line is still the dynamic support for the KLCI while the resistance is still at 1053 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, despite the KLCI ended lower, the Bollinger Bands Width expanded 10%, suggesting that the current movement is still bullish biased, with the Bollinger Middle Band being the dynamic support too.

As indicated by B, total market volume declined 20.5%, and slightly below the 40-day VMA level. The declined of volume suggests that the selling pressure was not huge, but if the KLCI should sustain its uptrend, volume must return to above 40-day VMA level soon, or else the market might be losing its positive sentiment.

As circled at C, the Stochastic declined as the KLCI ended lower, but still above 70% level. If the Stochastic should break below 70% level, it would be a signal suggesting a beginning of a technical correction.

As the Dow Jones Industrial Average and regional markets were mostly lower, the KLCI was also dragged down lower. In short, the KLCI is capped by the 1053 resistance, and to break above this resistance, we need more positive news as well as more market participation to sustain this uptrend.

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 1997-2009 Straits Index (M) Sdn Bhd All rights reserved