Again, in line with the negative performance of the Asian markets followed by an over-night losses of the Dow Jones Industrial Averages, the KLCI ended 1.1% lower on Thursday, breaking below the 887 WinChart Automatic Fibonacci Retracement support line. (As indicated by A). Therefore, the 887 level is now the resistance level, and the support for the KLCI is now at 800 points, which is the target level for the Head and Shoulders Top pattern.

As shown on the chart, the KLCI also break below the Bollinger Middle Band, and fortunately, the Bollinger Bands Width is still contracting (-30%), which suggests the KLCI is still consolidating. In other words, the direction for the KLCI is still unclear for it is gearing up for a new movement.

As indicated by B, total market volume fell 16.4%, and the volume was slightly below the 40-day VMA level. However, since the KLCI is still consolidating, the lower volume in general is still considered normal.

As circled at C, the Stochastic remains falling, breaking below the 50% level. This shows that the KLCI short term movement is weakening.

Nevertheless, with the Bollinger Bands Width still contracting, the KLCI is expected to remains consolidate until the expansion of the Bollinger Bands Width. If the KLCI should stay below the Bollinger Middle Band as the Bollinger Bands Width expands, it would be a bearish biased signal. However, if the KLCI should stay above the Bollinger Middle Band as the Bollinger Bands Width expands, it would be a bullish biased signal.

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