As the regional markets ended lower, the FBM KLCI shed 11.44 points or 0.9% on Monday, breaking below the Bollinger Middle Band dynamic support. (Refer to A). This is a first warning signal suggesting that the KLCI uptrend is in threat. Fortunately, the Bollinger Bands Width contracted 16%, suggesting that the KLCI is still under a consolidation stage, thus the KLCI has not formed a downtrend.

Support for the KLCI is at 1200 psychological level while the resistance remains at 1248 WinChart Automatic Fibonacci Retracement. If the KLCI should break 1200 level, the KLCI is likely to lose some strength. Nevertheless, the 14, 21, 31 EMA long term uptrend dynamic support is still intact.

As indicated by B, total market volume declined 19%, and the volume is still below the 40-day VMA level. This shows that the market participation is still low, and it is usually normal for the KLCI is still consolidating.

As circled at C, the Stochastic breaks below 30% level, entering the short term bearish region, suggesting that the KLCI short term is now bearish biased. Provided that the Stochastic is still below 30% level, the short term movement of the KLCI is expected to bearish biased.

In conclusion, the KLCI was dragged by the negative performance of the regional markets, and the KLCI breaking below the Bollinger Middle Band marks a sign of weakness in the KLCI. Nevertheless, with the Bollinger Bands Width still contracting, the KLCI has not formed a downtrend yet, but still, if the KLCI should stay below the Bollinger Middle Band, and when the Bollinger Bands Width re-expands, it would be a bearish signal for the KLCI.

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