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Technical Analysis Of KLCI

Technical analysis of KLCI, learn the trend of the index and support and resistance areas.

12 November 2021

It seems that the KLCI is finding support at the previous low. I have highlighted the area in green. I think as long as support holds, then the index is likely to reverse back up. On the other hand, if it drops below support then this will likely result in a bit more selling.

A positive thing is that the KLCI is now back above the 60 min 20 MA and trying to go back above the 50 MA. This is usually a bottoming sign. Although not conclusive but all bottoming happens when the index goes back above the 60 min 20 MA and 50 MA. They will have to go through these 2 MAs if a bullish move is to happen.

So we are seeing some encouraging signs here. The other thing to note is that there was a 60 min descending triangle. The value of a pattern is important but the failure of a pattern can even be more valuable.

If the descending triangle pattern fails, that means the bulls have won and this could result in a bullish move up.

But what we really want to see is for the KLCI index to move back above the downtrend line that I have done. This will be more positive and gives the bullish reversal a stronger case.

10 November 2021

It has been sometime since I analyzed the KLCI. Hopefully I can do it more frequently. But I think if you employ the 20/50 MA in the 60 min chart you could have gotten on the right side of the trend the majority of the time.

Anyway, the KLCI is still below the 60 min 20 MA and 50 MA which is not a very good thing. This is still in a bearish short term trend.

It has broken below a descending triangle recently. This is the second descending triangle. The first one happened in late October 2021 and it was nasty.

If KLCI does not go back above the breakdown point in the current  descending triangle then we could see more selling.

Best not to long most stocks until KLCI is once again above the 60 min 20 MA and 50 MA.

26 October 2021

While the US stock market has made all time highs, the Malaysian stock market did not shine very well. The problem with this market is that there has been too many political problems to really enable a smooth implementation of an economic policy that truly powers the economy of Malaysia.

You need a stable government which last at least 4 years like the US, without any interference that a change of power will be around the corner. Investors like certainty. Well at least that is what we hope can be achieved with a government that never changes hand for the next 4-5 years.

The above is the daily chart of the KLCI which looks pretty much like a mess. There is huge congestion resistance on the left and this is problematic as all this takes time for the supply to be absorbed.

However, there are some encouraging signs. First, the rally in late August to early September 2021 will have help to absorb some of the resistance or supply on the left.

Towards the mid of October 2021, we have another rally and this will also help to absorb supply. The KLCI made a higher low in the October rally and this is usually a good sign that we could be moving higher.

If you look at the chart above, you can also see that the KLCI broke a downtrend line which is also something that happens when a stock or index wants to go back up.

So far, the KLCI has not drop that much since it hit resistance. If it drops more we could look at the uptrend line support for a possible reversal back up.

But for now it is around 1587 and this is a shallow correction. Which brings my attention to whether the index could set up a bullish flag pattern. This is where the index has a rapid rise up (which we had) and then it trades sideways a bit to form a flag. And then we watch to see if there is a breakout higher above the flag.

Of course the flag has not even appeared yet but to an experienced eye, we often want to anticipate what the market wants to do. I anticipated a reverse head and shoulders in the US market and that was what happened and the market broke higher.

With the KLCI I am just anticipating a possible bull flag. Whether it really forms or not I do not know. But if it forms, a breakout above the flag will let me know that the KLCI is ready to move higher. Sometimes it is the waiting that is important. To watch and wait and when all the ducks line up and its firing on all cylinders then one can take action.

But before that, doing nothing is a skill.

The chart above is the weekly chart of the KLCI. We can actually draw trendlines to connect the highs and lows and what I got out of it is a weekly triangle. Triangles can breakout or breakdown but in this case we can see that the KLCI is poking above the upper side of the triangle.

This is where multiple time frame analysis comes to help us. You see, we anticipate a daily bull flag in the KLCI and IF it happens, the bull flag will be sitting at the upper part of the weekly triangle. And a breakout of the bull flag will be where the KLCI breaks higher above the weekly triangle. This could indeed help to propel KLCI higher.

Well, we wait and see. 

Have a great trading week!

7 October 2021

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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