Straits Index (M) Sdn Bhd
WinChart Technical Analysis
Daily Market Analysis
Send to a Friend Composite Index 06/05/2011
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As indicated by the L1 line, the KLCI formed a Lower-High, which is a first characteristic of a downtrend formatioin. As indicated by A, the KLCI also broke below its recent support of 1520 level, thus forming a short term downtrend. The KLCI is now testing the 1513.35 WinChart Automatic Fibonacci Retracement, and if the KLCI should break below this level, the next support for the KLCI is at 1498 or 1500 psychological support, while the resistance is at L1 line and the 14, 21 ,31 EMA dynamic resistance. Meanwhile, the Bollinger Bands expanded 28%, with the KLCI below the Bollinger Middle Band. Therefore, the Bollinger Bands is suggests a bearish biased signal for the KLCI.

As indicated by B, total market volume fell 0.4%, with volume staying below the 40-day Volume Moving Average. This suggests that the market is still lightly participated, while also implies that investors are not feeling confident of the local market. Therefore, the market as a whole is less likely to pick its strength.

As circled at C, although the Stochastic rebounded, it is still staying below the 30%, in the short term bearish territory. Should the Stochastic stay below 30%, the short term movement of the KLCI is expected to be weak.

In conclusion, after forming a Lower-high followed by breaking below its recent support, the KLCI is forming a short term downtrend. Technically, provided that the KLCI is staying below the L1 line or the 14, 21, 31 EMA, the technical outlook for the KLCI is negative.

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