The expansion rate of the Bollinger Bands Width is slowing down, thus the KLCI started to retreated, closing the day at 1196.46 points, downed 5.61 points ( refer to arrow A). Therefore, this suggests that the 1200 level is still the psychological resistance level for the KLCI, while the 1186 and 1163 WinChart Automatic Fibonacci Retracement are the support for the KLCI.

As shown on the chart, the KLCI begins its technical correction as the Bollinger Bands expansion slows down, and the first target of the technical correction is usually at the Bollinger Middle Band. Therefore, the Bollinger Middle Band is now serving as the dynamic support for the KLCI. If the KLCI should remain above the Bollinger Middle Band, the bullish biased immediate outlook for the KLCI is still intact.

As indicated by B, total market volume declined 18.1%, and as a result, volume is still below the 40-day VMA level. The relatively lower volume suggests that most investors are still on the sidelines, and therefore, the lower volume has failed to confirmed the recent KLCI bullish movement. Without sufficient market participation, the KLCI failed to break above the 1200 level successfully.

As circled at C, the Stochastic retreated after hitting 100%, suggesting that the KLCI short term movement was slightly over-heated, thus a technical correction is perfectly normal. Nevertheless, provided that the Stochastic is still above 70% level, the market movement for the short term is still bullish biased. In other words, if the Stochastic should break below 70% level, it would be an end to the KLCI short term uptrend.

In conclusion, the KLCI retreats as profit taking begins, and this is a typical technical correction signal. Provided that the KLCI could maintain above the Bollinger Middle Band, there is still a chance for the KLCI to resume its uptrend after this technical correction. However, if the KLCI should break below the Bollinger Middle Band during this technical correction, it would break the current short term uptrend.

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