As indicated by A, the FBMACE retreats as profit taking activities takes place, breaking slightly below the Bollinger Middle Band on Monday, losing 66.65 points or 1.6%. Fortunately, the Bollinger Bands Width is still contracting, and therefore, it suggests that the FBMACE has not formed a downtrend yet. Resistance for the FBMACE is still at 4398 WinChart Automatic Fibonacci Retracement while the support is at 4031 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands Width contracted another 11%, suggesting the FBMACE is still consolidating while also gearing up for a new movement. With the FBMACE below the Bollinger Middle Band, the immediate outlook is now slightly bearish biased. Therefore, it is important that the FBMACE should return to above the Bollinger Middle Band as quickly as possible to avoid more downside risk.

As circled at B, the Stochastic breaks below 70% level, and now testing the 50% level. This suggests that the beginning of a technical correction. If the Stochastic should break below 30% level, the market movement for the short term would turn to bearish biased. In other words, the Stochastic has to return to above 70% level in order to resume the short term uptrend of the FBMACE.

As circled at C, the MACD histogram is still falling while failing to form a Rounding Bottom. This suggests that the FBMACE is still consolidating while not re-gaining any strength. Unless the MACD histogram should form a Rounding Bottom, the weakening movement of the FBMACE is expected to continue.

Despite breaking below the Bollinger Middle Band marginally, the Bollinger Bands Width is still contracting, suggesting the FBMACE is still consolidating while, at the same time, preparing for a new movement. In short, the new movement of the FBMACE shall only be revealed once the Bollinger Bands Width re-expands, and then the direction of the new movement shall be determined by the position of the FBMACE above or below the Bollinger Middle Band.

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