The Bollinger Bands contracted 9%, and the KLCI failed to break above the 1270 resistance, as indicated by A, which is a typical post-budget correction. Support for the KLCI remains at 1248 while the resistance is at 1270 level followed by the 1300 psychological level.

As shown on the chart above, the Bollinger Middle Band is the dynamic support for the KLCI as the KLCI is having its correction. Generally, if the KLCI should remain supported by the Bollinger Middle Band, the immediate outlook for the KLCI is still on the positive side, and the current correction is only technical.

As indicated by B, total market volume declined 11.2%, with the volume below the 40-day VMA level. Nevertheless, usually when the KLCI is having its correction or consolidation, volume tends to decrease. However, if the KLCI should resume its rally, volume above the 40-day VMA level is a must to confirm the bullishness of the KLCI.

As indicated by C, the Stochastic fell on Monday as the KLCI ended lower. If the Stochastic should break below 70% level, the short term movement of the KLCI might be turning weaker. In other words, it is crucial for the Stochastic to maintain above 70% level in order to sustain the bullish biased movement.

In short, the KLCI is having its post budget correction, and for immediate view, provided that the KLCI is still supported by 1248 or the Bollinger Middle Band, there is still a chance for the KLCI to resume its uptrend. But if the Bollinger Bands should continue to contract, the consolidation or the correction of the KLCI is expected to continue, and then, we shall need to wait until the re-expansion of the Bollinger Bands to determine the new movement of the KLCI.

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