As indicated by A, the KLCI ended lower on Wednesday but remain supported by the Bollinger Middle Band dynamic support. Resistance for the KLCI is still at 887 WinChart Automatic Fibonacci Retracement while the next support is 800 level.

As shown on the chart above, the Bollinger Bands Width contracted 21%, suggesting the KLCI is now consolidating, and the market direction shall remain unclear until the expansion of the Bollinger Bands.

As indicated by B, total market volume on Wednesday is a 3 year new low, due to festive holidays, as well as uncertain market sentiment. Therefore, the overall market participation is indeed very quiet as investors show no interests in the stock market. Nevertheless, technically speaking, it is rather normal to see lower volume during a consolidation of the KLCI.

As circled at C, the Stochastic breaks below 70% level, suggesting an end to the short term bullish signal. Unless the Stochastic could return to above 70% level immediately, the falling of the Stochastic line implies a weakening short term movement for the KLCI.

In short, the KLCI is likely to consolidate again as the Bollinger Bands Width begins to contract, and if the KLCI should failed to remain above the Bollinger Middle Band, the immediate outlook for the KLCI shall turn bearish biased.

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