16 May16-May KLCI Index, KLCI index reaches 120D-Moving Average

16-May KLCI Index, KLCI index reaches 120D-Moving Average

Date: 16-May-2012

Malaysia KLCI Index: 1536 point

 

KLCI Index Overview

Malaysia KLCI index drop 24points and close at 1536points.  From the chart, we can see that KLCI index is having 3 dark candlesticks for 3 consecutive days and today is the largest candlestick among all.

During last Friday closing report, the article title isdate on 11/May,  KLCI index, Already Away?  We already stated KLCI index is at the decisive moment to decide on the direction.  And from volume analysis as well as MACD and Stochastic indicator, we already clearly see that the index is actually getting poorer, and we already asking investor to hold cash instead of share.

Now today KLCI index reach 120D-MA, what should we expect?  Could we expect a rebound?

Below trend chart is Malaysia KLCI index trend chart on 16/May.

 

 

Moving Average

For investor familiar about moving average trend chart, from the 10 moving average examine rules, we clearly see that 120D-MA is moving upward but 10D, 20D & 60D-MA is moving downward.

The crossover between 20D with 60D-MA is a strong signal investor should aware.  The Dead cross over of these 2 moving average trend line is crossing over at 1582 points and we believe this will be a strong resistance as well for any rebound.

Now the KLCI index is searching for support form 120D-MA, since the 120D-MA still at moving upward trend, we could expect the index should be able to get certain level of support base on the risen of 120D-MA.  However the other 4 moving average trend lines are moving downward, this reveal the index is facing a significant pressure for the rebound height.

Volume Analysis

We are able to conclude due to the shrinking in daily transaction volume, the moving average actually already moving downward before the price action.

 

Stochastic & MACD Indicator

The K value for Stochastic indicator already moved below 20%, many technical analyst may conclude KLCI index is expecting a rebound because the K value is reveal currently KLCI index is at over-sold zone.  However, we never make our interpretation simply base on K value.

The MACD also reveals the KLCI index is moving downward, and perhaps it could be just an early stage for a moving down trend

KLCI Index Summary

We are seeing KLCI index is finding support from 120D-MA, and we expect the index is should be able to get certain level of support at 1530 points.  Te rebound resistance is 1567 points.

Will 1530 points be the strong support?  We don’t think so.  We think 1489points the KLCI index should come.

KLCI Index Trading Strategy

We will be surprised if investor is not doing anything at this moment.  Remember, rebound is applied for a moving down market, any rebound could be the opportunity for letting go the stock in hand if there is any.