As indicated by A, the KLCI tested the 887 WinChart Automatic Fibonacci Retracement on Friday, but failed to break above the 887 level, and therefore, the 887 resistance remains intact. Support for the KLCI is at 800 WinChart Automatic Fibonacci Retracement, while the T2 line is the dynamic support for the KLCI.

As shown on the chart, the Bollinger Bands Width is still contracting (-23%), suggesting the KLCI is still in its consolidation stage. Generally, as the Bollinger Bands Width contracts, the market direction is unclear. In other words, the KLCI is gearing for a new direction, and the new direction shall be revealed once the Bollinger Bands Width re-expands.

As indicated by B, total market volume increased 18.6%, with the volume returned to above 40-day VMA level. This shows that the market participation is still at a healthy level.

As circled at C, the Stochastic breaks below 30% level by margin, suggesting the KLCI is turning weaker. But since the Bollinger Bands Width is still contracting, the signals from the secondary indicator are usually less significant.

In short, the KLCI is still at consolidation, while preparing for a new move. Generally, the longer the consolidation, the expansion of the Bollinger Bands Width signal would be clearer, thus producing a more precise signal for the new direction.

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