The worries of weakening global economy has affect the local market, causing the Asian markets to fall nearly 10%, and the KLCI was also affected, closing some 2.7% lower. As indicated by A, the Bollinger Bands Width expanded 60%, with the KLCI below the Bollinger Middle Band. Therefore, suggested bearish biased movement for the KLCI.

Generally, if the Bollinger Bands Width should continue to expand, the KLCI bearish signal is expected to continue until the Bollinger Bands Width should start contracting again, which would be a signal suggesting a consolidation for the KLCI. Based on the 20-days Bollinger Bands view, the KLCI broke below the 20-day Bollinger Lower Band with its daily low of 959.49 points and triggered a short term pull-back effect. Usually, the first target of the technical rebound is at the Bollinger Middle Band dynamic resistance.

As indicated by B, total market volume increased 42%, despite the KLCI closing lower. This shows that there were some bargain buying activities for some short term technical speculation. However, if the KLCI should continue to fall with increasing volume, it would be a sign of some panic selling, thus increasing the selling pressure. This is partly due to the T3 settlement effect as it would eventually increased the selling orders.

Other than negative technical readings, the external issues and global market performance is also playing an important role which would definitely affect the KLCI. Therefore, it is important to also study the major indices across the globe.

As indicated at C, the MACD histogram rounding top remains in sight, suggesting the KLCI is indeed weakening, and the weakening movement is expected to continue until the MACD histogram should form a rounding bottom.

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