KLCI Technical Analysis for Week 4 of November 2022

KLCI market was down by 1.3% last week, ending at 1,449 points in line with the flat trading range of 1,440 to 1,470 predicted last week. This week’s prediction would also be for a flat trading range at about 1,430 to 1,460 with a slight downward trend bias.

Bollinger band has continued to narrow after widening for the large part of November 2022.

The Bollinger band has continued to narrow from last week, indicating that it could be trading at a lower range this week. The prediction here is that the range could be around 1,430 and 1,460. There could possibly be a widening of the band this week in light of the increased uncertainties arising from a hung government. Markets could move either way, with the coalitions formed between the various parties increasing the risks of policy uncertainties.

Moving average indicates the same trend of flattening from last week also.

The moving average line (blue line) is indicating flat levels around the 1,450 level. The last time it flattened this way was during the August and September months, when it subsequently traded downwards because of interest rate hikes by the U.S.

Both the RSI and MACD indicators also indicate flat trading range for the week.

The relative strength index has continued to flatten at the 52 level last week, with the highest recorded RSI level of 65 in the middle of August. The previous peak was about 62 in the beginning of November. However, with much of the world now reporting weakening growth outlooks, it seems unlikely that KLIC could trade upwards to above 60 levels this week.

Furthermore, the MACD line (blue line) is basically converging with the signal line, and has been trading quite close to each other. There does not seem to be any particular strength in both the upward or downward trend.

The average directional index shows more downside risks to KLCI trading.

The average directional index has continued to decline to below the 20 level, and indicates very weak strength of the current trend. The average directional index has been easing since last week, and the market needs to perform much stronger for a stronger buy signal to emerge. What is crucial here is for the average directional index to trade above the 25 level.

The OBV indicator indicates a flat trading range for the week.

The On Balance Volume indicates that 1) price did not breach the peak or trough in the past week, and 2) OBV did not breach past the peak or trough also. Both indicators here are indicating a relatively flat trading range for this week, with no particular strength to both the upward and downward trend.