On Tuesday, regional markets rebounded as lead by the overnight gains in the US markets, but the KLCI only managed to gained 2.26 points, closing at 1208.21 points. Nevertheless, the KLCI managed to stay above 1200 psychological support level. Resistance for the KLCI remains unchanged at the 1248 WinChart Automatic Fibonacci Retracement. Other than 1200, the next support for the KLCI is seen at 1183.50 WinChart Automatic Fibonacci Retracement.

As indicated by A, the KLCI failed to break above the Bollinger Middle Band, and therefore, the immediate outlook for the KLCI is still on the negative side. Fortunately, the Bollinger Bands Width is still contracting, which suggests that the KLCI is now consolidating, while not yet forming a downtrend.

As indicated by B, total market volume increased 6.8%, but still below the 40-day VMA level. This suggests that the market participation is still low, and which is one of the main reason of the KLCI consolidation. In other words, unless volume should break above the 40-day VMA level, the KLCI is likely to consolidate.

As circled at C, the Stochastic rebounded, but failing to break above 30% level. Therefore, it suggests that the short term movement of the KLCI is still on the negative side. But again, the significance of the Stochastic signal is reduced as the Bollinger Bands Width is contracting. Nevertheless, if the Stochastic should break above 30% level, it would be a signal suggesting an improvement signal for the KLCI short term movement.

In conclusion, the Bollinger Bands is still contracting, and therefore, the KLCI consolidation continues, while not following the regional market performance. Meanwhile, the contraction of the Bollinger Bands Width also implies that the KLCI is now gearing up for a new movement, and the direction of the new movement will be determined by the relative position of the Bollinger Middle Band once the Bollinger Bands re-expands.

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