Our KLCI had been retreating violently since the peak h=1801 was identified on last week through daily chart. The huge gap (1718-1724) formed right after the election was filled eventually after it had failed upon the attempt on last July. The gap filling implied the the strength of the long term rally isn't very strong. Probably, it's moving steadily in the up channel in the chart with a very weak bullish force. Right now, the selling isn't expected to distort the bullish long term view.
(A) Weekly Technical Signal:1. Stochastic : (Neutral)
Continued to move downwards for the 2nd consecutive week after the objective for previous bullish signal wBFS@1786 which was entering the overbought area 80 had been fulfilled. Right now, no signal is triggered yet.
2. MACD: (Bearish)
The histogram turned negative after the weekly death cross on last week. The bearishness is reinforced and remained still intact. Although this weekly death cross isn't very reliable but it still achieves 60% accuracy.
(B) Conclusion:
Although no technical signal is triggered on this weekly chart, but it still retained the bearishness atmosphere created on last week. Since it had declined sharply about 85 points in a single week, the chance for a technical rebound to happen is quite high before it further decline again.
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