KLCI Weekly Analysis 15/04/05 
For the week ended on 15^th of April, the KLCI had a technical rebound from the down trend channel support (T2). It opened at 864.39 on Monday, which was the low of the week, and later advanced all to way up to the high of 880.07 where it hit the resistance of WinChart Fibonacci Retracement at 878.96, together with the 10 day Bollinger Band upper band. 

Main Chart
Since KLCI failed to break out from the down trend channel, the channel is still intact. In addition, KLCI on Friday 15/04 closed right on the 200 MA at 874.25. As a result this is the immediate support. Further supports can be found at 10 Bollinger Band Middle band, as well as the WinChart Automatic Fibonacci Retracement at 859.81. 

Bollinger Band
Bollinger Band was consolidating for most of the week except on Friday, with a slight widening of 4%. Although this was not a significant width to give any trading signals, KLCI managed to close above the Bollinger Middle Band. Should Bollinger Band extends further next week, upside movement is likely to occur. On the other hand, if price closed below the middle band, the movement is reversed when Bollinger Band extends. 

Volume
For the week, volume remained below the 40 day VMA. Total volume of the week stood at 1,821,846,000 shares, which was a 3.7% decline from last week’s total volume. As we all know, volume is a crucial element in order for the KLCI to break away from the down trend channel. Consequently, upside movement is unlikely for KLCI until volume is above the 40 days VMA. 

MACD
MACD issued a short term buy signal on Wednesday, 13/04/05. For longer term, MACD line is still situated below the zero level, and thus the signal is considered weak. The buy signal is confirmed when the MACD line cross above the zero line. 

RSI
RSI managed to break away from the 30% (Mid-term Bearish zone) on Monday 11/04/05. This is a good sign for it suggests that the KLCI is temporary sheltered away from the down side risk. However, readers are advised watch out if RSI fall back in to the 30% level next week. At the mean time, should KLCI moves side way, we shall see RSI wondering around the 50% neutral zone, thus giving no technical trading signals. 

Stochastic
%K of Stochastic broke above 50% level on Wednesday 13/04/05 and reach all the way above 70% on Thursday. Due to the pull back of KLCI at the (T1) down trend resistance, %K of Stochastic also retreated slightly. In order for KLCI to go higher, we need to have both %K and %D lines above 70% thus symbolizes short-term bullish zone. For the week ahead, if KLCI moves side way, the significance of Stochastic decreases. 

Important note:
Readers can take note of the MACD histogram on the KLCI weekly chart where it is showing some sign of correction. Based on historical data, weekly MACD histogram rarely issue false signals. Therefore, it pays to study the weekly MACD for the coming weeks. 

In the Nutshell
Overall, we considered last week’s movement as a technical rebound for two important reasons. First, volume of the entire week was trading below 40 day VMA. And second, KLCI was unable to break out from the down trend channel. Although STC and 10 day Bollinger Band did show minor buying signals, we expect the KLCI to remain down trend. Mean while, we do not discount the likely hood of KLCI to go sideway for the coming week for weekly MACD histogram suggests a possible correction.

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