Millionaire Trend Trader: Appearence of Hammer in KLCI

Wednesday, October 28, 2009

Appearence of Hammer in KLCI - a temporary bottom

Most regional indices were down on Tuesday due to the overnight DJIA’s fall of 104 points. FBM KLCI opened with a down gap of 2.39 points, and was rapidly sell down to the day’s low of 1246.38 (-13.54) due to panic selling. The emergence of bargain hunters soon lifted the KLCI back above the 1250 mark and was then hovering between 1251 and 1254 most of the day, a last minute buying by local funds further push the KLCI to close at 1260.30 (+0.38, +0.03%). The price action of KLCI formed a hammer candlestick chart pattern which indicates a temporary bottom. Losers led gainers by 403 to 263, with 1.004 billion shares traded.

From the chart, it was seen that the short term 10 days SMA has provided immediate support for the KLCI. The medium and long term trend as indicated by the 30, 60 and 120 days SMA are still up. However, MACD continues to slide down, indicating the weakening of momentum. RSI was up slightly, and Stochastic was down, giving mixed signals.

Today, the KLCI is expected to trade within the range of 1256 to 1270, with strong resistance expected at 1270, and support is at 1256 and 1251.

This week's expected range: 1244 – 1285
Today's expected range: 1256 – 1270

Resistance: 1265, 1270, 1275
Support: 1246, 1251, 1256

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The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. - Jesse Livermore

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Wednesday, October 28, 2009

Appearence of Hammer in KLCI - a temporary bottom

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