As shown on the chart above, the Bollinger Bands expanded 6%, with the FBM KLCI below the Bollinger Middle Band, and the KLCI closed 3.9 points lower at 1261.46 points. Support for the KLCI is at 1257 WinChart Automatic Fibonacci Retracement while the resistance is at 1288 WinChart Automatic Fibonacci Retracement.

As indicated by A, the KLCI precisely resisted by the Bollinger Middle Band, as the Bollinger Middle Band is now the dynamic resistance for the KLCI. Basically, the immediate outlook for the KLCI is now bearish as long as the KLCI is below the Bollinger Middle Band. Fortunately, the expansion of the Bollinger Bands was not significant. If the expansion of the Bollinger Bands should continue, more downside movement is expected for the KLCI.

As indicated by B, total market volume declined 4.3%, with volume staying below the 40-day VMA level. This shows that the market is quiet, and lightly participated, as the KLCI is at a bearish biased sideways movement. Despite the KLCI only ended marginally lower, bearish biased movement remains intact.

As circled at C, the Stochastic is still falling, suggesting that the short term movement of the KLCI is indeed 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 showing some early signal of a downtrend formation. Unless the KLCI could break above the Bollinger Middle Band in the near term, the downside movement is expected to continue. If the KLCI should break below the 1257 WinChart Automatic Fibonacci Retracement, the next target for the KLCI would be at 1237.

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