Technically the KLCI remained bearish below both the short and long term 30 day and 200 day MAs. These averages were at 1852 points (200 day average) – 1855 (30 day average) points. The index failed to climb above the long term MA after testing it last week and this indicates that market confidence was still weak.
Momentum indicators like the RSI, Momentum Oscillator continued to indicate that the bears are still in control as the indicator were below their mid levels. After rebounding last week, these indicators started to decline after failing to climb above their mid levels. The MACD indicator remained below its MA and this also indicates that the trend was bearish. Furthermore, the KLCI was still below the middle band of the Bollinger Bands and near the bottom band.
The indicators show that the KLCI is set to trend lower. The USD may start trending upwards again after the correction end and this will not be in favor of the ringgit and equity market. It has also test the support level at 1840 points once again and closed below it on 07 Oct 2014.
Expect bearish momentum to continue this week and the index to decline to support level at 1820 points based on the bottom band of the Bollinger Bands indicator.
The market is expected to bearish as long as it stays below the immediate resistance level of 1855 and 1860 points.