As indicated by A, the KLCI opened gap down as affected by the performance of regional market, closing 19.29 points or 2.1% lower. This has confirmed Wednesday's candlestick with a relatively long upper shadow line, which suggested an increased of selling pressure thus a sign of a technical correction. Nevertheless, the KLCI found its support around 887 WinChart Automatic Fibonacci Retracement, and therefore, the 887 level shall remain as the support for the KLCI while the 940 (38.2% WinChart Automatic Fibonacci Retracement) is still the resistance for the KLCI.

As shown on the chart, the Bollinger Bands Width contracted 7% on Thursday, suggesting the KLCI is likely to consolidate. Also, the Bollinger Middle Band could serve as the temporary support for the KLCI, and if the KLCI should rebound from the Bollinger Middle Band, there is a chance for the KLCI to rebound again.

As indicated by B, total market volume declined sharply (56.6%) with volume below the 40-day VMA level. It is important to point out that if the KLCI should retreat or correct with lower volume it is usually a healthy signal for the selling activities was not huge. Therefore, it is likely to see another rebound of the KLCI in the near future after the selling have been absorbed by fresh buyers.

As circled at C, the Stochastic started falling from 90% level, suggesting a weakening signal for the short term bullish signal. However, if the Stochastic should maintain above 70% level, the market movement for the short term is still bullish biased.

Generally, the technical correction is within the expectation from technical point of view, and the performance of the global markets do plays an important role in affecting the KLCI performance as well. Although the current correction of the KLCI is rather healthy, the KLCI has not broken above its downtrend.

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