Share analysis
Positive closing for the past few days followed by low
volume signify bearish divergence that will lead to further downtrend. DMI
indicator send distress signal as D- and ADX lines pointing down. I reckon
that, correction is imminent. So, in
today write up I will focus more on the support level of KLCI based on the
daily chart. Minor support will be at 1,863 level. Penetration of minor support
will give us an early signal that the correction may persist. First support
zone is plotted approximately between Fibonacci retracement of
38.2% and 50%.
So this level believe to be strong and solid, failure to stay above this level
will give an early signal of market weakness and sideways movement will dictate
the market for few weeks before trending pattern resume. Second support zone
believe to be stronger, failure to stay above this level indicates that, major
correction is about to happen so it is better to liquidate long position and
stay away for a while.
Trading strategy
From the technical evidences above, I reckon that correction
is about to happen, so it’s better to stay side line and hold some cash. Buy on
pullback is the best strategy for long term investor. As always, day trader
should stick with buy on breakout strategy. Use candle stick, volume and
indicator to confirm the entry.
Projection
Resistance - 1880 (previous high) 1900 (psychological high)
Support – 1863 (minor support) 1852-1840 (first support zone) 1800-1780(second support zone)
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