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Thursday, December 11, 2008

Bollinger Bands / 综合指数 2008年 12月 10日 / Composite Index 10/12/2008

Bollinger Bands By Zhuge Liang

Bollinger Bands were invented by John Bollinger. Used to confirm trading signals, normally from a Momentum Indicator the bands indicate overbought and oversold levels relative to a moving average.

Bollinger Bands are calculated at a specified number of standard deviations above and below the moving average, causing them to widen when prices are volatile and contract when prices are stable.

Bollinger originally used a 20 day simple moving average and set the bands at 2 standard deviations, suited to intermediate cycles.

Because standard deviation is a measure of volatility, Bollinger bands adjust themselves to the market conditions. When the markets become more volatile, the bands widen (move further away from the average), and during less volatile periods, the bands contract (move closer to the average). The tightening of the bands is often used by technical traders as an early indication that the volatility is about to increase sharply.

This is one of the most popular technical analysis techniques. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

综合指数 2008年 12月 10日

如图中箭头A所示,综合指数跟随亚太股市上扬,并且稍微突破了布林中频带(Bollinger Middle Band),这表示综指有望出现转强的趋势。无论如何,综指还是要等到布林频带(Bollinger Band)开始明显的打开,那综指才能确认出现上扬的趋势。






Composite Index Daily Technical Analysis 10/12/2008
As indicated by A, the KLCI broke above the Bollinger Middle Band by margin on Wednesday, as the Asian markets ended broadly higher. Breaking above the Bollinger Middle Band is crucial for the KLCI, and if the Bollinger Bands Width should re-expands with the KLCI above the Bollinger Middle Band, it would be a positive signal for the KLCI.

As shown on the chart, the Bollinger Bands Width expanded 0%, suggesting the KLCI is currently still consolidating. Support for the KLCI is still at 800 points while the 877 Fibonacci Retracement is still the next resistance for the KLCI.

As indicated by B, although the KLCI ended higher, total market volume was 12.4% lower, while still below the 40-day VMA level. It is important to have volume above the 40-day VMA level in order to sustain any bullish movement of the KLCI.

As mentioned on Tuesday's analysis, the Stochastic rebounded after touching 0% level, as it was over-sold. As a result, the KLCI rebounded on Wednesday. As circled at C, the Stochastic is breaking above the 30% level, suggesting a beginning of a technical rebound.

With the Stochastic at the 50% level now, the market movement for the short term is at neutral. If the Stochastic should break above 70% level, it would be a short term bullish signal for the KLCI. And definitely, the KLCI above the Bollinger Middle Band is another criteria for the KLCI to sustain its positive movement.


1 comment:

Ivan said...

hi ZL,

In the pass days TA Analaysis, I always see that you mention this statement :
Support for the KLCI is still at 800 points while the 877 Fibonacci

Isnt 800 and 877 is a big cap? Can have a small gap for s/term investor/ trader?supoiort
Sorry. Just express my view.

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