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KLSE Market Analysis 23 January 2019

The market has been trading sideways for sometime and one wonders if it might set up a consolidation to breakout higher. Let us take a look at what the charts are telling us.

The daily chart of KLSE above leaves much to be desired. It has been in a downtrend for quite some time until mid December 2018 when it bottomed. It then traded sideways for awhile to form a consolidation which it tried to breakout. However, just when it is about to breakout, the Dow Jones has already reached a resistance area which caused difficulties in the local market.

Hence, it is always important to look at the big picture and what the Dow Jones is doing. Currently we can say that the market is still consolidating. Notice the box that I have drawn. This will be important to focus on. There is a possible bullish cross that might happen that gives us a little glimpse of hope.

For a breakout to happen, it needs to trade above the consolidation and though the breakout is positive, there is a 200 MA resistance which is just about where a measured move breakout target is. Hence it is going to be a challenging market environment.

If the market breaks below the consolidation, then we can expect lower prices.

Let us now turn to the weekly chart of KLCI. The market found support at a long term support area stretching way back to 2016 and 2017. It formed a weekly bottoming tail there and offered a small rally. We are still in a very weak environment and for a real long lasting bull rally, the market needs to break above the weekly downtrend line. Until then, its a trader's world and one should be careful in initiating positions as we are not in a long term uptrend kind of environment.