The FBM KLCI ended almost flat, losing only 0.04 points, as the Bollinger Bands contracted 14%. Generally, when the Bollinger Bands is contracting, the fluctuation of the index is usually lower, as it is the signal suggesting a consolidation. Support for the KLCI remains at 1248 WinChart Automatic Fibonacci Retracement and the Bollinger Middle Band is still the dynamic support. Since the Bollinger Bands is now situated at the 1248 level, this is likely to strengthen the support for the KLCI.

As indicated by B, total market volume declined another 17.8%, with volume at the 40-day VMA level. This, however, is quite normal for the KLCI is consolidating, as investors are staying on the sideline while waiting for more fresh leads. Nonetheless, the lower volume also suggest that there is no panic selling in the market.

As indicated by C, the Stochastic is still falling, as the KLCI short term movement is weakening. If the Stochastic should break below 70% level, it would be a signal suggesting an end to the short term bullish movement. In other words, it is crucial for the Stochastic to maintain above 70% level.

Meanwhile, the MACD histogram is still falling, suggesting that the KLCI short term movement is still weakening. Unless the MACD histogram should form a Rounding Bottom, the weakening movement of the KLCI is expected to continue.

In conclusion, the KLCI is still having its technical correction or a consolidation, with the Stochastic and MACD histogram showing signs of a weakening movement for the KLCI. But, with the KLCI still supported by the Bollinger Middle Band, the KLCI has not formed a downtrend yet. In other words, the Bollinger Bands Width must re-expand to confirm the new direction for the KLCI. In shorts, technical indicators, such as the Stochastic, are only showing early sign of weakening movement, it has to be confirmed by the Bollinger Bands.

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