As indicated by A, the KLCI formed a Spinning Top candlestick pattern, suggesting some profit taking activities. Meanwhile, the KLCI hit a resistance at 970 (972 WinChart Automatic Fibonacci Retracement) together with the 200-day Moving Average, and therefore, the KLCI is testing an important resistance level.

Support for the KLCI is still at 937 while the Bollinger Middle Band as well as the T1 uptrend line are still the dynamic supports for the KLCI. Meanwhile, the Bollinger Bands Width also contracted 8%, suggesting the KLCI is about to consolidate or even a technical correction.

As indicated by B, total market volume increased 18.6% on Thursday, making a 19 months volume new high. With the KLCI precisely resisted by the 200-day Moving Average line, the huge volume on Thursday actually suggested that the 970 and the 200-Moving Average level is going to be a strong resistance for the KLCI. Nevertheless, should volume remain above the 40-day VMA level, the current positive market sentiment is likely to sustain.

As circled at C, the MACD histogram continued to fall, forming a rounding top. This suggests that the KLCI short term is having a consolidation or even a technical correction. As long as the MACD histogram is still falling, the short term movement for the KLCI is expected to be weaker, until the MACD histogram should form a rounding bottom.

With the KLCI resisted by the 970 and the 200-day Moving Average, coupled with indicators signals suggesting consolidation or technical correction signals, the KLCI is likely to consolidate. Technically speaking, a healthy uptrend must have consolidations and corrections. Generally, the first target for the consolidation is at the Bollinger Middle Band, and if the KLCI should rebound from the Bollinger Middle Band with strong volume, it is likely to resume its current rally.

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