As indicated by A, the KLCI tested the 887 WinChart Automatic Fibonacci Retracement resistance line on Monday, but failed to break above it. Therefore, the 887 level shall remain as the resistance for the KLCI. Meanwhile, the KLCI formed a candlestick with a relatively long upper shadow, suggesting some selling pressure as profit taking activities kicked in during the afternoon session. Support for the KLCI is still at 800 points.

As shown on the chart above, the Bollinger Bands Width expanded only 5%, which is not significant. Since the KLCI is pulling back, therefore, the target of the pullback should be at the Bollinger Middle Band, which is the dynamic support for the KLCI.

As indicated by B, total market volume is still below the 40-day VMA level, suggesting that the market as a whole is still relatively quiet. Therefore, without sufficient market participation, the KLCI is less likely to pick up any strength.

As circled at C, the Stochastic is still falling, but remain above 70% level, which is the short term bullish region. Therefore, this shows that the market movement for the short term is still bullish biased. If the Stochastic should break below 70% level, it would be a signal suggesting a beginning of a technical correction.

As the KLCI started to pullback after its gain on last Thursday, the Bollinger Middle Band support will be a crucial level to watch out, for if the KLCI should be supported by the rising Bollinger Middle Band, there is still a chance for the KLCI to continue its improvement. Of course, other factors including the performance of the regional markets will affect the KLCI performance as well.

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