A rapid rise in the KLSE in the past week has brought hope to the bullish camp, but can the bullish momentum turn into a new uptrend?
The art of finding the bottom is not an easy one. Sometimes just when you thought that a rapid rise is bullish, the next week, the market can go down again.
I think for a sustainable rise in the KLSE I would like to bring your attention to a simple line....The Downtrendline.
Looking at the daily chart of KLSE above, we can see that it formed a double bottom reversal pattern and it also broke above a recent downtrend line. This technical development helped to send it higher. Rapid rises can often accompany a bottoming pattern.
The question now is will this turn into a sustainable uptrend?
You will need to have a look at the heavier downtrendline that I have drawn. We want to see it trade back above this downtrend line.
Secondly we also want to see it trade back above the daily 50 MA.
There might be some resistance as KLSE hits the declining 50 MA as well as the declining 200 MA. Therefore, we want to see some kind of bullish pattern form. Perhaps a box continuation breakout pattern or a cup with handle pattern.
The formation of these patterns show that the bulls are slowly taking back control and a breakout above these patterns will hint of a bigger bullish run up.
The chart above shows the 60 min chart of KLSE. As you can see, there was a 60 min bullish cross recently and also a breakout higher. At this moment, KLSE is still in an uptrend. As long as it stays above the 20 MA and 50 MA, we should still be bullish but do be careful of any short term correction if it breaks down below these MAs.
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