As indicated by A, the FBM KLCI rebounded precisely from the 1257 WinChart Automatic Fibonacci Retracement, and the KLCI is now testing the Bollinger Middle Band, closing at 1265.45 points. Support for the KLCI remains at 1257 WinChart Automatic Fibonacci Retracement while the resistance is at 1288.

As shown on the chart above, the Bollinger Bands contracted 6%, suggesting that the KLCI is consolidating, while recovering from its losses. If the KLCI should break above the Bollinger Middle Band, there is a chance that the KLCI might regain some strength.

As indicated by B, total market volume reduced 2.6%, while still further below the 40-day VMA level. This suggests that despite the rebound, overall market participation is still low. Nonetheless, this is rather normal for the KLCI is basically consolidating. If the KLCI should attempt to resume its uptrend, volume above the 40-day VMA level is a must, or else the rally is less affirmed.

As circled at C, the Stochastic is now breaking above 50% level, suggesting that the short term movement of the KLCI is slightly improved. If the Stochastic should break above 70% level, it would be a short term bullish signal for the KLCI.

The rebound at 1257 level, has lifted the market outlook slightly, and the next target for the KLCI is the Bollinger Middle Band. If the KLCI should break above the Bollinger Middle Band with the Bollinger Bands expanding, we shall expect to see some year-end window dressing effect. Also, if volume should increased to above the 40-day VMA level, the KLCI might test the 1288 level.

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