As indicated by A, the KLCI ended lower on Tuesday, with its daily low precisely supported by the Bollinger Middle Band before closing at 898.53 points. Therefore, the Bollinger Middle Band is still serving as the dynamic support for the KLCI.

As shown on the chart above, the Bollinger Bands Width started to contract 2%, suggesting the KLCI is now consolidating. Meanwhile, the KLCI is forming a symmetrical triangle with L1 being the dynamic support and L2 being the dynamic resistance. The symmetrical triangle also suggests that the KLCI is at its consolidation as the market direction is still unclear until a valid break out above the L2 or below the L1. Nevertheless, other supports for the KLCI remain at 885 WinChart Automatic Fibonacci Retracement while the 905 WinChart Automatic Fibonacci Retracement is still a resistance for the KLCI.

As indicated by B, total market volume decreased 11.2% on Tuesday, with volume staying below the 40-day VMA level. This shows that the overall market participation still low as investors are still being cautious while staying on the sideline. Nevertheless, it is generally normal to have lower volume during a consolidation, but if the KLCI should break above from the Symmetrical Triangle, volume above the 40-day VMA level is a must to confirm a valid break out.

As circled at C, the Stochastic is testing the 70% level, while still holding up at the short term bullish region. If the Stochastic should break below 70% level, it would be a signal suggesting beginning of a technical correction, thus the KLCI short term movement is expected turn weak.

In short, the formation of the Symmetrical Triangle is in line with the contraction of the Bollinger Bands Width. Until a valid break out of the Symmetrical triangle or a re-expansion of the Bollinger Bands Width , the consolidation of the KLCI is expected to continue.

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