As indicated by A, the Bollinger Bands expanded, with the FBM KLCI above the Bollinger Middle Band, and the KLCI ended higher, breaking above the 1270 WinChart Automatic Fibonacci Retracement. The next resistance for the KLCI is seen at 1300 WinChart Automatic Fibonacci Retracement while the supports are at 1270 followed by the 1248 WinChart Automatic Fibonacci Retracement.

The Bollinger Bands expanded 22%, suggesting a bullish movement for the KLCI. Generally, if the Bollinger Bands should continue expanding, the upside movement of the KLCI is expected to continue, until the Bollinger Bands expansion rate decreases or the Bollinger Bands contract. Then, it would be a signal suggesting a technical correction or a consolidation for the KLCI. The Bollinger Middle Band is now serving as the dynamic support for the KLCI.

As indicated by B, total market volume increased 5.3%, while firmly staying above the 40-day VMA level. This suggests that the market as a whole is well-liquid, as inflow of fresh capital is still sufficient to absord the selling pressure. This is a positive element that help sustain the KLCI uptrend.

As circled at C, the Stochastic retreated after hitting 100%. This is a signal of an over-heated short term movement, as the KLCI formed a candlestick with an upper shadow line. Nonetheless, provided that the Stochastic is above 70%, the short term movement for the KLCI is still positive.

In short, the KLCI ended higher with a gap as the Bollinger Bands expands, but still, profit taking is relatively strong on Tuesday as the KLCI formed a candlestick with an upper shadow line. Nevertheless, technically speaking, the immediate outlook for the KLCI is still bullish, until the Bollinger Bands should contract.

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