Technical analysis of KLCI, learn the trend of the index and support and resistance areas.
KLCI had a nice rise yesterday after it formed a double bottom on the chart. Previously in my analysis of the KLCI I mentioned that the price congestion on the left could act as support. The KLCI manage to find support at the price congestion. A bottoming tail formed today in the KLCI which means that if KLCI manages to trade above the highs of the bottoming tail, there is a possibility for it to go higher to the resistance area.
The resistance area is a potential area of short term resistance and that is where the short term run up will likely stop for awhile.
The weekly chart above shows that the KLCI may be forming a large weekly triangle. Most probably the breakout might be to the upside since the previous move before the triangle is a move up which started in March 2020 after the Covid Crash that hurt stock markets around the world.
There is quite a lot of congestion on the left and usually with heavy congestions, it takes quite some time to absorb the supply. The last move up near that area quickly drop back down because of the heavy congestion. It might have absorb some supply and I think that the rise up this time still has some supply to deal with.
Which is why we need to see KLCI really break above the downtrend line in the triangle to be really certain that the rise is genuine.
Going back to a lower time frame we now look at the 60 min chart of the KLCI. The KLCI was trading sideways a bit and even had a break down lower but quickly recovered back up. It did manage to break above a resistance area which I have highlighted in green color and this area will be a new short term area of support for the KLCI.
As long as the index stays above this support area then I think that it will most likely be able to move back up to the resistance area on the left. When KLCI reaches the red area that I have highlighted then it is very possible for it to halt a bit. We will see how it turns out when it reach there. Meaning if there will be a decline correction or a sideways movement for it to break out higher later.
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