As shown on the chart above, the Bollinger Bands stopped expanding, suggesting that the KLCI is taking a consolidation. Generally, when the Bollinger Bands contracts, the KLCI direction would be unclear until the re-expansion of the Bollinger Bands. Meanwhile, the Bollinger Middle Band is now serving as a dynamic resistance for the KLCI.

As indicated by B, total market volume declined 2.4%, with volume touching the 40-day VMA level. If volume should remain relative high when price is falling, it suggests an increased of selling pressure.

As indicated by C, the Stochastic started falling, after touching 100% for a few days. Nevertheless, the Stochastic is still above 70%, thus the short term movement of the KLCI is still on the positive side. If the Stochastic should break below 70%, it would mark an end to the short term bullish signal.

In conclusion, the 1400 level is still the resistance for the KLCI and the KLCI is expected to consolidate from here until the re-expansion of the Bollinger Bands. If the KLCI is still below the Bollinger Middle Band, when the Bollinger Bands re-expand, the KLCI would go down further.

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 1997-2010 Straits Index (M) Sdn Bhd All rights reserved