As indicated by A, the Bollinger Bands Width expanded 11%, with the FBMKLCI below the Bollinger Middle Band, the KLCI ended 6.13 points lower, closing at 1202.08 points. Despite the intra-day losses, the KLCI is still supported by the 1200 level, and therefore, the 1200 psychological support level remains intact while the resistance is at 1248 WinChart Automatic Fibonacci Retracement.

As shown on the chart, the Bollinger Bands Width expanding with the KLCI below the Bollinger Middle Band is a bearish signal, and therefore, the KLCI has to return to above the Bollinger Middle Band as soon as possible, or else, if the Bollinger Bands Width should expand further while the KLCI below the Bollinger Middle Band, more downside risk is expected for the KLCI.

As indicated by B, total market volume increased 16.7%, despite the KLCI falling. However, volume is still below the 40-day VMA level. Generally, it is best if volume should stay relatively lower during a downtrend, for it suggests that the selling pressure is not too strong. However, if the KLCI should resume its uptrend, a relatively higher volume is required to sustain the rally.

As circled at C, the Stochastic ended lower, even breaking below 10% level. This shows that the short term movement of the KLCI is indeed weak, but it now now over-sold, suggesting that the KLCI might have a technical rebound in the near future. Nevertheless, the Stochastic has to break above 30% in order for the KLCI to break away from the short term bearish region.

Technically speaking, the immediate outlook for the KLCI is still on the weaker side, unless a valid break out above the Bollinger Middle Band. Still, the KLCI is testing its 1200 support level, and with the Stochastic showing a sign of a possible technical rebound, the KLCI is due for a rebound. But a rebound is insufficient for the KLCI to break away from its current bearish biased movement. Therefore, a valid break out above the Bollinger Middle Band is imperative if the KLCI should break away from its weaker 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 1997-2009 Straits Index (M) Sdn Bhd All rights reserved