Sunday, July 4, 2010

KLCI Direction

KLCI index hit a wall of resistance this week together with the stock market around the world.

Compared to other indexes around the world, KLCI is having a stronger performance. The index is still above its 200 day moving average and the death cross scenario where the 50 day moving average crosses below the 200 day moving average has not occurred.

However, there are warning signs in the technical chart.

Firstly, the MACD indicator is about to go below its signal line. The RSI indicator is decreasing but has not reached oversold values. This means that there is a short term weakness in the index. Stochastic chart is also showing weakness in the near term.

ADX is now at around 20 levels and looks to be ticking up. –DI is now slightly above the +DI. This suggests that the index is likely to continue moving down but the strength of the down move will not be strong unless we see a higher ADX value in the coming week.

All in all, the index will continue to go down in the coming weeks or at best be range bound. Do trade with care.

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