As indicated by A, the KLCI gained 5.68 points or 0.5% on Wednesday, after breaking above the Bollinger Middle Band. Resistance for the KLCI is at 1272 WinChart Automatic Fibonacci Retracement while the support is at 1250 level, as well as the Bollinger Middle Band dynamic support.

As shown on the chart above, the Bollinger Bands contracted 4%, suggesting that the KLCI is still consolidating. The consolidation of the KLCI is expected to continue until the re-expansion of the Bollinger Bands.

As indicated by B, total market volume remain below the 40-day VMA level, suggesting that the overall market is still very quiet. Technically, as the KLCI is still consolidating, a lower market volume is normal. However, if the KLCI should attempt to rally, volume above the 40-day VMA level is a must to confirm the bullish movement.

As circled at C, the Stochastic breaks above 70% level on Wednesday, entering the short term bullish territory. However, due to the contraction of the Bollinger Bands, this short term bullish signal is yet to be confirmed. This is because, whenever the Bollinger Bands contracts, significance of the Secondary Indicator signals is reduced. Nonetheless, if the Stochastic should remain above 70% level, the short term movement of the KLCI is expected to improve.

In conclusion, with the KLCI above the Bollinger Middle Band, the immediate outlook is slightly positive. If the KLCI should remain above the Bollinger Middle Band, there is still a chance for the KLCI to regain its positive position, but it has to be confirmed with the re-expansion of the Bollinger Bands, with the KLCI above the Bollinger Middle Band, coupled with the volume above the 40-day VMA level.

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