KLCI Downtrend To Continue

The fall in Dow Jones Industrial Average shows a change in market trend and economic conditions.  Big money from hedge funds, institution and fund managers withdrew in droves, causing great volatility in the market.

Looking at the charts of KLCI, it looks very similar to the drop in 2008 when the Lehman Brothers collapse brought about a big drop in stock market worldwide. 

The index is trying to find a bottom and it looks like a rebound may materialize.  However, it will face resistance at around 1500 level.  Judging from the magnitude of the decline, the bears are still in control and the strategy should be sell on strength as the market is poised to move lower.

KLCI In Bullish Trend

KLCI broke out of its resistance level of 1560 level and it is now at the upper channel of the Bollinger band.

The GAMMA chart is showing strong uptrend with the short term and long term groups of moving averages showing bullish trend.

This shows that both short term traders and long term investors are supporting the market.

In the short term, the market may pull back towards its 20 day moving averages.

If it does so, then it will be a good time to add into your positions.

KLCI Likely To Be In Trading Range

KLCI index rebounded off its lower Bollinger band on 28 Feb.  The index is now above its 20 day moving average and is set to test its upper Bollinger band at around 1539 level.

Technically the index looks bullish.  The MACD indicator just made a bullish crossover with its signal line.  The +DI is now above its –DI line.  However the ADX indicator is still low at current levels and that means that we do not expect a strong uptrend.   2 day RSI is reaching overbought levels and we will most likely see a pullback.  The index looks set to remain in trading range between 1476 and 1539 levels.