On Tuesday, the FBM KLCI was supported by the 1270 WinChart Automatic Fibonacci Retracement, and rebounded to close at 1272.09 points, upped 1.21 points. However, it is still resisted by the Bollinger Middle Band. Therefore, the Bollinger Middle Band is still the immediate resistance for the KLCI while other resistance is at 1300 level. 1270 WinChart Automatic Fibonacci Retracement is still the support for the KLCI.

As shown on the chart above, the Bollinger Bands is still contracting, suggesting that the KLCI is still consolidating. Nonetheless, since the Bollinger Bands is now very narrow, it implies that the consolidation is near its end, and when the Bollinger Bands should re-expands, it would be a signal of a beginning of a new movement, and the direction of the new movement shall be determined by the relative position of the KLCI above or below the Bollinger Middle Band.

As indicated by B, total market volume declined 6%, with volume below the 40-day VMA level. This suggests that the market is now relatively quiet as the KLCI is consolidating. Technically, it is normal to have lower volume during a consolidation. But if the KLCI should its uptrend, volume above the 40-day VMA level is a must, in order to sustain the rally.

As circled at C, the Stochastic is testing the 30% level. Therefore, it has not shown a short term bearish signal for the KLCI yet. If the Stochastic should break below the 30% level, it would be a short term bearish signal for the KLCI, and the short term movement for the KLCI is expected to be on the negative side.

In short, the KLCI is still consolidating while preparing for a new movement. If the Bollinger Bands should re-expand with the KLCI above the Bollinger Middle Band, it would be a positive signal for the new movement. Otherwise, if the KLCI should stay below the Bollinger Middle Band as the Bollinger Bands re-expands, it would be a bearish signal for the KLCI.

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