As indicated by A, the KLCI rebounded on Thursday, but precisely resisted by the Bollinger Middle Band, which is still the dynamic resistance for the KLCI. If the KLCI should break above the Bollinger Middle Band, the immediate outlook for the KLCI would improve.

As shown on the chart above, the Bollinger Bands Width contracted another 12%, suggesting a lower volatility of the KLCI continues, which implies a consolidation. Meanwhile, the contraction of the Bollinger Bands Width also suggests that the KLCI is preparing for new direction, and the new direction shall be revealed once the Bollinger Bands Width re-expands.

As indicated by B, total market volume increased 94.5%, with volume above the 40-day VMA level. However, readers have to take note that roughly 20% of the total market volume are related from a single company, and therefore, the signal of volume above the 40-day VMA level is less significant at the moment.

Nevertheless, if volume should remain above the 40-day VMA level, it could help lift the market sentiment thus a better chance for the KLCI to break away from its consolidation.

As circled at C, the Stochastic breaks above 30% level on Thursday, leaving the short term bearish region, and signaling a technical rebound. However, in order to signal a short term bullish signal, the Stochastic would have to break above 70% level.

In short, the rebound on Thursday is a positive sign, but still, we need to wait until the Bollinger Bands Width to expands with the KLCI above the Bollinger Middle Band to confirm any bullish signal.

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