The FBM KLCI closed at 1292.85 points on Tuesday, downed 1.66 points. Currently, the KLCI is basically moving sideways in its consolidation stage. Resistance for the KLCI is still at 1300 level while the support is at 1288 followed by 1276 WinChart Automatic Fibonacci Retracement.

As shown on the chart, the Bollinger Bands contracted 11%, suggesting that the volatility of the KLCI is reducing, thus a typical sign of a consolidating market. The consolidation of the KLCI is expected to carry on until the re-expansion of the Bollinger Bands. During this consolidation, the Bollinger Middle Band is the dynamic support, and if the KLCI should break below the Bollinger Middle Band, the immediate bullish biased outlook would end.

As indicated by B, total market volume increased 20%, with volume above the 40-day VMA level. This suggests that the market is still actively participated. Generally, the relatively higher volume means a continuation of inflow of fresh capital, thus the market sentiment is likely to maintain positive.

As indicated by C, the Stochastic retreated slightly, but still above 70% level, which suggests that the short term bullish signal is still intact.

In conclusion, the contraction of the Bollinger Bands suggested that the KLCI is still consolidating, and until the re-expansion of the Bollinger Bands, the KLCI is gearing up for another new movement, while the next direction would be determined by the position of the KLCI above or below the Bollinger Middle Band.

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