On Friday, the KLCI opened higher, but during the afternoon trading session, it started to weaken before falling 7.98 points or 0.51% to close at 1571.40 points. As indicated by A, the KLCI is re-testing the L1 uptrend line, as well as the 14, 21, 31 EMA dynamic support again. Resistance for the KLCI stays at 1597.08 or 1600.
As indicated by B, total market volume gained 77.56%, with volume above the 40-day Volume Moving Average. However, most of the heavily traded counters are low-priced stocks, and therefore, the increased of volume failed to reflect any improvement of investors confidence.
As indicated by C, the Stochastic falls below 30% on Friday, re-entering the short-term bearish territory. If the Stochastic should continue to stay below 30%, the short-term movement of the KLCI is likely to stay weak.
In conclusion, if the KLCI should break below the L1 uptrend line, the uptrend will be temporarily interrupted. However, it does not mean that the KLCI would immediately reverse and form a downtrend, not until the KLCI has formed lower-highs, which is one of the characteristic of downtrend formation.