Despite strong rebound across the Asian Pacific markets, the KLCI only managed to gain 1.2 points. Fortunately, the KLCI is still staying above the Bollinger Middle Band, and the immediate outlook is slightly improved. Nonetheless, the Bollinger Bands is still contracting (-14%), suggesting that the KLCI is still consolidating.

As shown on the chart above, the KLCI is still testing the L1 uptrend line, and it is still too closed to call if the KLCI would resume the uptrend. Nevertheless, support for the KLCI is at 1257 WinChart Automatic Fibonacci Retracement while the resistance is at 1288 WinChart Automatic Fibonacci Retracement followed by the 1300 psychological level.

As indicated by B, total market volume declined 24.7%, and the volume is still further below the 40-day VMA level. This shows that the market is lightly participated, as investors are being cautious, while staying on the sidelines amid market uncertainty. Generally, a lower volume is the typical characteristic of a consolidating market.

As circled at C, the Stochastic is now above the 70% level, entering the short term bullish territory. However, it is important to know that the Stochastic is a Secondary indicators and its signals have to be confirmed by the Primary indicator. Generally, the significance of its signals is reduced when the Bollinger Bands contracts.

With the KLCI now above the Bollinger Middle Band, the outlook of the KLCI has been lifted slightly, with some positive signal from the Stochastic. Still, we have to wait for the re-expansion of the Bollinger Bands with the KLCI staying above the Bollinger Middle Band to confirm the bullish signal. If the KLCI should failed to maintain above the Bollinger Middle Band as the Bollinger Bands expands, it would be a bearish signal, otherwise.

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