For the last two days, the Stochastic has been warning that the KLCI short term movement has gone over-heated, and the KLCI ended lower on Wednesday. Nonetheless, the KLCI closed precisely at 1270, suggesting that the 1270 is the immediate support. Resistance for the KLCI is at 1300 psychological level.

As shown on the chart above, the Bollinger Bands expansion rate reduced from 21% to only 8%, (indicated by A), and as a result, the KLCI technically corrected, and the target for the technical correction is usually at the Bollinger Middle Band, which is serving as the dynamic support. If the KLCI could rebound from the Bollinger Middle Band, the KLCI might resume its uptrend, and if the KLCI should break below the Bollinger Middle Band, the weakening movement of the KLCI shall carry on.

As indicated by B, total market volume reduced another 5.1%, but the volume is still above the 40-day VMA level. Therefore, overall market is still well-participated, and with volume above the 40-day VMA level, the market sentiment as a whole is still positive.

As circled at C, the Stochastic is still falling, suggesting that the KLCI is having its technical correction. If the Stochastic should break below 70% level, it would be an end to the short term uptrend, and the correction of the KLCI shall continue, and might even turn into a downtrend.

After staying over-heated (Stochastic reaching 100%), the KLCI retreated, but still, the overall uptrend remains intact as the KLCI is still above the Bollinger Middle Band, and the KLCI is only having its technical correction now.

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