On Tuesday, the KLCI was hit by negative news across the region, closing 1.1% lower. As indicated by A, the KLCI fell below the 887 WinChart Automatic Fibonacci Retracement and the next support for the KLCI is at 869 followed by 853 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands Width expanded 24%, with the KLCI below the Bollinger Middle Band. Therefore, the expansion of the Bollinger Bands Width suggesting a bearish movement for the KLCI. The bearish movement for the KLCI is expected to continue until the Bollinger Bands Width contracts again.

As indicated by B, total market volume declined another 10.9%, with volume staying below the 40-day VMA level. This shows that the market participation is relatively lower, thus the KLCI is losing its strength.

As circled at C, the Stochastic is still below 30% level, which is the short term bearish region. Therefore, the short term bearish movement of the KLCI continues, until the Stochastic break above the 30% level successfully. Meanwhile, since the Stochastic is nearly at 0%, it suggests that the KLCI might be over-sold, and therefore, a technical rebound is likely to take place in the near future. But still, to confirm the technical rebound, the Stochastic has to break above 30% level. Until that, the short term movement of the KLCI is still on the negative side.

In conclusion, the Bollinger Bands Width has shown a bearish direction for the KLCI, and for now, the bearish movement of the KLCI is likely to continue until the Bollinger Bands Width should contract, which would suggest another consolidation for the KLCI.

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