On Thursday, the KLCI opened gap up again, but soon the KLCI retreated to filled up the gap as profit taking takes place, at the close, the KLCI lost 0.49 points. Resistance for the KLCI remains at 1053 WinChart Automatic Fibonacci Retracement while the supports are still at 200-day MA as well as the Bollinger Middle Band dynamic support.

As indicated by A, the Bollinger Bands Width only expanded 8% (compared to the previous 22%), this shows that the Bollinger Bands Width might be contracting. If the Bollinger Bands Width should begin to contract, it would be a signal suggesting a consolidation for the KLCI.

As indicated by B, total market volume increased 34%, suggested the market was indeed very active, in fact, it marked another new high since the 28th of February, 2007. Although market volume increased substantially, it is actually suggesting that the KLCI is near a stronger resistance level, and therefore, there is a risk of a technical correction in the near term.

As circled at C, the Stochastic reached 100% and retreated on Thursday, breaking below 90% level. This suggests that the KLC short term is now over-bought, and a risk of a technical correction is expected in near term. Nevertheless, should the Stochastic remain above 70% level, the market movement for the short term is still bullish biased.

The filling of the opening gap is generally a signal suggesting the market is over-heated as investor takes profit. However, it is absolutely normal if the KLCI should have a technical correction or a consolidation. The important part is that the KLCI has to be supported by the Bollinger Middle Band after its consolidation or technical correction in order to sustain its uptrend.

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