As shown on the chart above, the Bollinger Bands Width contracted 41%, suggesting that the KLCI is still consolidating, while closing 2.22 points higher on Friday. Meanwhile, as indicated by A, the KLCI failed to break above the Bollinger Middle Band, however, with the Bollinger Bands Width remains contracted, the KLCI outlook has not turned bearish. Resistance for the KLCI remains at 1053 WinChart Automatic Fibonacci Retracement while supports are still at 1000 mark followed by the 200-day MA.

As indicated by B, total market volume declined another 23.2%, but still above the 40-day VMA level. This suggests that the market is still actively participated. Generally, it is normal to see a decline of volume as the KLCI is consolidating.

As circled at C, the Stochastic ended lower, breaking slightly below the 50% level, suggesting that the KLCI short term is about to turn weak. If the Stochastic should break below 30% level, it would signal a short term bearish movement for the KLCI.

Despite the KLCI is staying below the Bollinger Middle Band, the KLCI has not turned bearish because the Bollinger Bands Width has not expanded. While the Bollinger Bands Width is still contracting, signals from the secondary indicators like the Stochastic might be over-sensitive, and therefore, the priority of the analysis should be at the chart patterns and the primary indicators such as the Bollinger Bands and the Moving Average.

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