Technical Outlook KLCI August


As on 12th August 05 KLCI close at 937.04 point.

There was 5 down days in the last 7 days giving some minor correction. The important breakout at 940 reflecting the bull's momentum failed to hold. Is the last few days correction is the beginning of a major correction?

The KLCI  index has gain a lot for many weeks and there yet any meaningful correction. Last few days at least gave some needed healthy correction after gaining more than 60 points since early July. While I expect some major correction (at least to 915 or 905) sooner or later, maybe not so soon. The last few days' correction only show there were less buying activities not some major selling (unless this situation persisted!). Displaced Moving Average, MACD & Stochastic Oscillator already gave negative signals but in trendy period, there could could give hook-up (bullish) signal anytime. Anyway, this much depends on the market's ability to hold support at 930. Failed to hold, expect the beginning of a major correction.

Next week's market action to be watch cautiously. Momentum is decreasing and many technical indicator show bearish divergence with the index movement. Though the last trading day on 12th August 05 is an up day but the volume is low compare to the last 24 trading days. Candlestick reading suggesting its in mixed sentiment mode and the market expected to be in range-bound within the next few days. (see KLSE Daily Chart & Technical Chart above

On the bullish side, if around this time, if the CI managed to breakout of 940, I believe its should be no problem for it to go to 960-980.

On the longer term, the main bullish trend still intact and 905-895 will become the main pivot zone incase correction persists. (see KLSE Weekly above)

For next few weeks, watch for:
If the market manage to breakout 940 again, expect it to go toward 960-980.
If 930 failed to support, wait for for buying opportunities at the likely pivot/support/rebound level at 915 or 905.