Here is the analysis for the Malaysian stock market for the month of February 2020. Updated almost daily. Press the refresh button daily for the latest analysis.
Today the KLCI formed a long legged doji in its daily chart.
This is a sign of indecision among market participants. The month of February has not been good for the Malaysian stock market. Only a slight bounce up in early February 2020 but then it continue to move lower.
Those who follow the trend will know that the KLCI is in a bad shape.
Notice how it is below its daily 20 MA, 50 MA and 200 MA. This is a sign of a bear market and a bearish trend.
Therefore, one should respect the trend and continue to remain bearish or cautious on the Malaysian stock market.
There are rumors of a new government and perhaps if the new government can come out with good policies that stimulate the Malaysian economy, then perhaps the KLCI might go up.
But I think if the Coronavirus issue still affects the world markets then it will be quite hard for Malaysia to get out of this bear market for now.
As long as the KLCI is below its 20 MA, 50 MA and 200 MA, you need to be bearish or at least remain cautious of this market.
I will start a new page on KLCI for the month of March 2020 so today's will be the last update on this page.
While the US market dropped again, the KLCI manages to stay afloat not moving anywhere. Perhaps market participants are undecided of what to do.
A wait and see approach as the Malaysian political situation is in a stalemate.
Take note of the two trend lines.
KLCI did not break above the horizontal trend line and neither did it drop below the lower uptrend line. I guess a wait and see approach is happening in the market as politicians try to hammer things out.
What do you think about the political situation in Malaysia?
Boris Johnson had a fresh election to get Brexit done and that cleared the political situation in UK when the Conservative got an overwhelming majority.
Should Malaysia have an election then?
Coming back to the charts, if KLCI can trade above the horizontal line, then it could rise higher and perhaps meet the resistance area. But do remember that the 60 min trend is still bearish and therefore, one should still remain quite cautious on the KLCI.
If KLCI breaks below the lower uptrend line, then there is a big possibility that the KLCI might continue to move lower.
I think one of the best ways to survive the market is to do nothing when your area of expertise or specialization is not present in the chart.
Think about that.
What a week it has been for Malaysians. Not only has the Coronavirus fears affect stock markets in Asia, Malaysia is also affected by its own political crisis.
While there is no certainty in leadership in Malaysia, it could continue to have an impact on the Malaysian stock market. Investors do not like uncertainty and therefore, I recommend that Malaysian investors or those who invest in Malaysia to remain cautious on the KLCI.
The other thing is the KLCI is still below its:
This shows an extreme bearishness and therefore one should be bearish or cautious on the KLCI and the Malaysian stock market.
One should learn to respect the trend.
If the trend is bearish one should be very very cautious.
There are 2 trend lines that I would like you to take note of today. The first is the horizontal trend line. If KLCI manages to trade above this line, then there could be a slight bounce up.
Why do I say a slight bounce up? The reason is KLCI is still in a daily and 60 min bearish trend. Therefore, any rise could be met by another wave of selling. That is how a bearish trend works.
Just when you thought that it could go up more, the bears come in to send the market lower again.
The other trend line to watch is the lower uptrend line. One could say that the horizontal line and the lower uptrend line could form an ascending triangle. But then this is probably a weak one.
A trade below the lower trend line could signal weakness and a pattern failure. What this means is if the KLCI breaks below the lower trend line, then it could go lower.
By the way, the daily chart of the KLCI formed a daily topping tail today.
This tells us that the market tried to move up today but eventually weakness sets in to make it close lower. Usually a drop below the lows of the topping tail would send it lower.
Therefore, in combination with the 60 min chart, if KLCI breaks below the 60 min uptrend line and also the lows of the daily topping tail then the KLCI could go lower.
Today, the KLCI had some relieve. It did not rise that much but at least it did not drop that much either.
The political uncertainty may still persist for a bit and once things clear, it might help the market. But do remember that the 60 min trend is still down.
Therefore, one should continue to be cautious about the KLCI.
I do not see any nice buy pattern for now. Maybe you could see.
It is still below the 60 min 20 MA and if it rises, take note of the red resistance area. This is where the gap resistance and previous low resistance is.
If KLCI is to rise more, it will need to go above this resistance area. Otherwise it could just be an oversold bounce up and then the bear trend will resume.
Last weekend and today, Malaysians were being treated to an exciting political drama that involves the resignation of our Prime Minister, Tun M.
The political uncertainty plus the global market sell off due to the Coronavirus fears has caused a meltdown in the Malaysian market.
It gapped down today below the previous low and ended pretty near the low of the day.
In the previous analysis, I have mentioned that the 60 min trend of the KLCI is down. It pays to respect the trend. When the trend is down, one should respect the trend and be cautious or bearish.
There are many unexpected things that the ordinary person may not know. Perhaps the politicians know, but one thing investors can do is to follow the trend.
There is a reason why the daily and 60 min trend of the KLCI is down.
We may not always know the reason but by following the trend, we can always protect ourselves.
Notice how the daily chart above points to the KLCI below the declining 20 MA, 50 MA and 200 MA. It is below all moving averages and therefore one should continue to be very cautious of the Malaysian stock market.
The other thing to take note is the resistance areas.
I have highlighted for you the Resistance 1 and Resistance 2 in red color above.
Even if the market bounces back up, do remember there is resistance above. And when the trend is down, the resistance areas are much more harder to overcome.
Another thing to take note is the performance of the US market when it opens. If the market does very badly today, then the KLCI might fall further tommorow.
Well, it looks like the bearish trend is still in progress. 60 min chart is still negative. That is why we should continue to be bearish or cautious on the Malaysian stock market.
If KLCI drops below today's low again, then it might challenge the previous low.
Follow the trend. When the trend is down, do be careful.
KLCI is still in a bearish 60 min trend.
The pressure is still downward which is why it is struggling to go up. It tried to go above the downtrend line but the downward pressure is still making it hard for it to rise.
Perhaps the area to watch is the horizontal support line. If it drops below here then there could be more weakness. But if it can manage to stay above here then it might bounce back up.
If you take a look at the 60 min chart of the KLCI, you will notice that it is below its 60 min 200 MA, 50 MA and 20 MA. The faster moving averages are also below the slower moving average.
This means that the 60 min 200 MA is above the 60 min 50 MA and the 50 MA is above the 20 MA. This is usually a picture of very bearish trend.
KLCI also recently had a 60 min bearish cross in the 20 MA and 50 MA.
Therefore, there is quite a lot of bearish pressure playing here. In this case, one should continue to be very cautious of the Malaysian stock market as it is not good to play against the trend.
If KLCI drops below today's low then there could be a 60 min bearish continuation and the KLCI might drop further and perhaps challenge the previous low.
On the other hand, despite the bearish trend, KLCI still finds it a bit slow to drop. Perhaps some hidden strength? Well, we will have to take a look at the downtrend line.
If KLCI manages to go above the downtrend line, then perhaps there could be a bounce upwards. But do remember the trend is still bearish and therefore one should remain cautious.
Time really flies doesn't it?
We are 2 weeks now into the month of February. I must say that the KLCI is in a challenging environment right now. From a daily perspective, it is in a downtrend and therefore it is not easy to play stocks or the index in such an environment.
Therefore, one should always be on the lookout for the perfect pattern in this environment. Do not simply enter but have the patience to wait for the right chart pattern to form.
I must admit it is difficult to analyze the index when it is in a bearish market.
Sometimes the bounces can be fast and when it drops, it can be fast as well. Best to always play a nice uptrending stock or index.
The 60 min chart of the KLCI above shows that it is about to have a 60 min bearish cross. Usually a bearish cross can give us hints that the market is about to fall further.
It has already broken below a 60 min uptrend line. When the index broke below the 60 min uptrend line, it showed weaknesses.
It also formed a rounded type of pattern and this might hint of further weaknesses.
If KLCI drops below the low of today's trading, then it might go lower and possibly meet the previous low. With the fears of Coronavirus gaining steam again because of the massive jump in China's figure, it might put downward pressure on world markets especially Asian ones.
Do note that the KLCI is still below its declining 60 min 200 MA.
This is a sign of weaknesses and will put downward pressure on the market. Therefore, one should still be cautious about the Malaysian market.
The KLCI is still below its declining 200 day moving average. This is an indication of a bear market.
If you take a look at the chart above, you will also be able to see that it is below the declining 20 MA and 50 MA. This is quite a bearish situation.
Unless the KLCI is able to go back above the 20 MA and also the 50 MA, then one should be very cautious of this market.
Currently it is hovering at the resistance area. It broke down of the previous low around 1550. When the index broke down below that support area, support becomes resistance.
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