The KLCI had a daily low reaching 1089.47 points before rebound strongly at mid day as the regional market closing higher. At the close, the KLCI ended the day 1102.48 points with a long lower shadow candlestick pattern. (As indicated by A). This suggests that the KLCI is supported by the 1100 level, and the lower shadow candlestick also suggests a sign of a technical rebound.

As shown on the chart above, the Bollinger Bands Width remains expanding, and therefore, the immediate outlook for the KLCI remains bearish biased. Nonetheless, if the Bollinger Bands Width expansion should reduce, the KLCI is likely to rebound and regain some losses, and the first target of the technical rebound would be the Bollinger Middle Band.

As indicated by B, total market volume increased 6.9%. Although total market volume has not reached the 40-day VMA level, it is getting closer. If the KLCI should rebound with the increase of volume above the 40-day VMA level as well, the KLCI might have a chance to regain its strength.

Since the KLCI is poised to have a technical rebound, readers are advised to monitor the Stochastic. If the Stochastic should break above the 30% level, it would be a technical signal suggesting a beginning of the technical rebound. The significance of the technical rebound signal would be higher if the Stochastic signal should take place together with the contraction of the Bollinger Bands Width. (Study A)

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