KLCI has gone up quite a lot since the lows but where do we go from here? Let us take a look at the charts to analyze the KLCI.
After a breakout from the triangle, the KLCI went up a bit but as the US market weakened yesterday, the Malaysian stock market also weakened a bit.
It is trying to go below the 20 MA in the 60 min chart and there is a possibility that it might challenge the previous high support that I have highlighted in green color.
The previous high will be a support area and as long as the KLCI stays above the lows of this area, then the KLCI might bounce back up from there and continue to move higher.
What a great day it has been for the Malaysian stock market.
It has already broken out of the triangle that I showed you some time ago. Yesterday I also pointed out to you about the bottoming tail and how if KLCI breaks above the highs of the bottoming tail, it can go higher.
I think it has met the initial target of the bottoming tail. That will be the height of the bottoming tail itself.
We can actually have a 2nd target which we can take from the height of the triangle pattern itself.
If we project it upwards from the apex of the triangle, then we can get a target of around 1475. That will be the second target for the KLCI.
KLCI formed a bottoming tail today. Shows that there are some sellers who are afraid but eventually the market went back up to close near the highs.
If KLCI can go above the highs of the bottoming tail tomorrow, then it is quite likely that it will continue to move higher.
KLCI has not broken above the daily triangle or pennant.
A triangle or pennant can be a continuation pattern and since KLCI has broken above the upper trend line of this triangle, it means it wants to go higher.
So the odds of it moving higher is bigger than the odds of it moving lower.
The tip or apex of the triangle will now be a new support area to watch.
A healthy breakout will stay above the apex of the triangle and continue to move higher.
If KLCI can stay above the apex of the triangle, then I think it will move higher. How it moves higher I do not know.
Perhaps a slow grinding up?
When it continues to move up, KLCI is most likely to meet the declining 200 day moving average somewhere in the future.
KLCI has already broke above the triangle in the 2 hour chart and if it continues to stay above the upper trend line then KLCI can go higher.
The 2 hour chart of KLCI shows it is challenging the upper trend line in the triangle. If it can break out of it, then we can go higher next week.
Some stocks just defy gravity.
For those who attended the webinar I did sometime ago, you will realize the setup that Top Glove gave in this weekly chart.
KLCI today closed higher and is still finding support at the lower trend line of the triangle I showed you 2 days ago.
The above daily chart of the KLCI also shows us that it is forming its own daily triangle as well.
Triangles can be a continuation pattern and if KLCI breaks above this pattern then it is likely to continue to move higher.
Sometimes even when the stock market is not doing that well, there is always a bull market somewhere in that stock market.
In the case of the Malaysian stock market, we can see that those rubber companies that produce things related to usage of Coronavirus did quite well in the stock market.
Those who attended my webinar would know what setup the weekly chart of Kossan Rubber made.
If you are one of them and reading this page do remember to be patient always and look for this weekly setup : )
Trading in the KLCI is still pretty boring as the index is still in the process of deciding which way it wants to break out of the triangle.
Here I showed you a 2 hour chart of the KLCI.
It is still hugging the lower trend line and support still holds. Hopefully it can go back up and break above the triangle.
A break below the triangle may tell us the KLCI wants to go lower.
KLCI is still trading within the triangle pattern that I draw in the 60 min chart.
It is still staying above the lower uptrend line of the triangle pattern. It is on the week side as it is hugging the lower trend line. If it was strong it would have challenged the upper trend line.
We have to wait and see which way it wants to break out of.
If KLCI breaks out of the upper trend line then it can go higher.
A break below the lower trend line might signal weakness and send the KLCI lower.
Today we will not be looking at the KLCI. We will let the analysis yesterday slowly materialize.
I want to show you a chart of a stock that went up even if the KLCI is not performing that well. Even in a slow market, there is always a stock or two that will move up.
The above is the weekly chart of Supermax.
I did a webinar for my group members last week and this is a setup that I taught them. For those who attended the webinar, they would have known what setup this is.
They would know how to enter, take profit and ride the trend up.
There are two trend lines below that I have drawn. I did not draw it today but I drew it sometime ago when I did a video analysis of the KLCI and Malaysian stocks.
If I am not mistaken in that video I said that if Supermax is able to break above the downtrend line, then it could go higher.
Well it did and what do you know!
It shot up quite a lot.
So, it reminds us that sometimes a simple thing like breaking a downtrend line can have a significant impact.
KLCI can be said to be still in a very very boring consolidation phase.
So far so good.
It has not drop nastily below the green support area yet and thus we should continue to treat the sideways movement as a consolidation.
Sooner or later it will break higher or lower. We do not know.
Watch the support area carefully. As long as KLCI stays above this support area, we have a hope that it will consolidate and perhaps breakout higher later.
KLCI may be forming a large 60 min triangle and this could be a way for us to figure out where it wants to go.
If it breaks out above the upper trend line then we could go higher from there.
However, if it breaks below the lower trend line then we may see lower prices. Watch where it breaks out of.
KLCI gap down today and had weaknesses mirroring the performance of the US stock market. While it is weak it is still trading above the support area.
As long as it is trading above the support area, we can still consider it to be trading sideways. However, a break below the green support area will mean more weakness will come in.
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