On Wednesday, the KLCI tested the Bollinger Middle Band in the morning session, but it managed to rebound from the Bollinger Middle Band, as indicated by A, and the KLCI only losing 1.78 points at the close. Support for the KLCI remains at 1257 while the resistance is still found at 1288.

As shown on the chart above, the Bollinger Middle Band is now serving as the dynamic support for the KLCI, and KLCI is likely to be supported by the Bollinger Middle Band. Meanwhile, the Bollinger Bands expanded 2%, suggesting that the Bollinger Bands is gradually expanding. If the Bollinger Bands should expand with the KLCI above the Bollinger Middle Band, it would be a bullish signal for the KLCI, and the upside movement of the KLCI is expected to continue until the Bollinger Bands contracts again.

As indicated by B, total market volume increased 24%, but still below the 40-day VMA level. This suggests that despite some improvement of the market participation, the overall market is still quiet as investors are still being very cautious. Generally, total market volume has to stay above the 40-day VMA level in order for the market to stay bullish.

As circled at C, the MACD line rebounded without breaking below the zero level, this suggest that the long term movement of the KLCI is still holding up. If the MACD line should continue rising, it suggests that the long term positive movement of the KLCI is likely to remain intact.

In short, the KLCI managed to stay above the Bollinger Middle Band, which is an important level. Therefore, if the Bollinger Bands should re-expand with the KLCI above the Bollinger Middle Band, the KLCI is likely to pick up some strength.

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