As indicated by A, the KLCI again failed to sustain most of its early gain despite reaching its daily high of 926.65 points, ended the day with only 9.66 points or 1.1% higher. Therefore, the KLCI formed a long upper shadow candlestick, which suggests some increase of selling pressure. Support for the KLCI is still at 887 WinChart Automatic Fibonacci Retracement while the resistance is at 940 (38.2% WinChart Automatic Fibonacci Retracement)

As shown on the chart above, the T1 line is also the dynamic resistance for the KLCI, together with the Bollinger Middle Band dynamic. On Wednesday, the Bollinger Bands Width only expanded 2%, which is insignificant, suggesting the KLCI rally is losing pace. If the Bollinger Bands Width should contract, it would imply an consolidation for the KLCI or a technical correction.

As indicated by B, total market volume increased 1.1% on Wednesday, with volume clearly above the 40-day VMA level. Therefore, the overall market is still actively participated, which is still a positive sign for the KLCI.

As circled at C, the Stochastic is now above 90% level after rising for 5 consecutive trading days. The Stochastic is now situated in the short term over-bought region, suggesting the KLCI short term movement is over-heated. Therefore, it is normal to see a technical correction in the near future. However, if the Stochastic should remain above 70% level after the mild correction, the market movement for the short term is still bullish biased.

In short, with the relatively long upper shadow candlestick, coupled with the over-heated signal from Stochastic, the KLCI is expected to have a technical correction in the near term. Still, the performance of the global markets play an important role in leading the KLCI movement.

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