On Monday, the FBM KLCI ended slightly lower, while precisely supported by the 1270 WinChart Automatic Fibonacci Retracement, closing at 1270.88 points. This shows that the 1270 WinChart Automatic Fibonacci Retracement is still the support for the KLCI while the resistance remains at 1300 psychological level.

As shown on the chart above, the Bollinger Bands contracted 31%, suggesting that the KLCI is still consolidating. Nevertheless, since the band width is now very narrow, it implies that the consolidation of the KLCI is nearing its end. If the Bollinger Bands should re-expands with the KLCI returning to above the Bollinger Middle Band, the KLCI is likely to resumes its uptrend.

As indicated by B, total market volume declined 5.9%, with volume below the 40-day VMA level. This is a typical behavior during market consolidation, as investors are staying on the sidelines while waiting for some fresh leads. Nonetheless, if the KLCI should resume its uptrend, volume above the 40-day VMA level is a very important element to sustain the uptrend.

As circled at C, the Stochastic breaks below 50% level, suggesting that the short term movement of the KLCI is still weakening. If the Stochastic should break below 30% level, it would be a short term bearish signal for the KLCI.

In short, the KLCI is still consolidating while preparing for a new movement; and the direction of the new movement is yet to be revealed, with the expansion of the Bollinger Bands width and the relative position of the KLCI againts the Bollinger Middle Band.

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