The contraction of the Bollinger Bands Width has prevented the KLCI from falling further, and therefore, the KLCI has not formed a downtrend, as indicated by A. Meanwhile, this also suggests that the 1200 psychological support level is still intact, while the resistance is still at 1248 WinChart Automatic Fibonacci Retracement.

The Bollinger Bands contracted 7%, with the KLCI below the Bollinger Middle Band, and therefore, the immediate outlook for the KLCI is still on the weaker side. Nevertheless, the contraction of the Bollinger Bands suggests that the KLCI is likely to consolidate, while preparing for a new movement.

As indicated by B, total market volume fell 24.7%, suggesting that the overall market participation is indeed very low. This is generally typical, for the KLCI is consolidating. Technically, when the KLCI is on a rally, it has to be confirmed with volume above the 40-day VMA level. However, during a consolidation or a downtrend, volume does not have to be above the 40-day VMA level.

As circled at C, the Stochastic rebounded slightly, after breaking below 10% level in the over-sold region, as mentioned on Wednesday's analysis. Therefore, the KLCI technically rebounded. If the Stochastic should continue to rebound, and break above 30% level, it would be a signal suggesting that the KLCI is breaking away from its short term bearish movement.

With the Stochastic over-sold signal and the contraction of the Bollinger Bands Width, the KLCI technically rebounded, while temporary stop falling. Technically speaking, as long as the Bollinger Bands is contracting, the KLCI is likely to consolidate. Nevertheless, if the Bollinger Bands Width should re-expands with the KLCI below the Bollinger Middle Band, the KLCI would continue its bearish biased 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