As indicated by A, the FBM KLCI retreated as profit taking takes place. The KLCI closed at 1317.94 points, downed 6.28 points. Resistance for the KLCI is at 1354 WinChart Automatic Fibonacci Retracement while the support is at 1300 level.

As shown on the chart above, the Bollinger Bands expansion rate reduced from yesterday's 39% to only 5%, suggesting that the KLCI might be consolidating. If the Bollinger Bands should begin to contract, it would be a consolidating or correction signal for the KLCI, and the Bollinger Middle Band shall be the target of the correction.

As indicated by B, total market volume declined 31.3%, with the volume below the 40-day VMA level. With volume below the 40-day VMA level, it implies that the market confidence as a whole is still relatively low. Technically, in order to sustain the bullishness, volume has to be firmly above the 40-day VMA level.

As indicated by C, the Stochastic declined slightly, but still remained above the 70% level. Therefore, the short term bullish signal for the KLCI remains intact. If the Stochastic should break below 70% level, it would be an end to the short term bullish signal, and a beginning of a technical correction.

In conclusion, the KLCI has gained about 100 points since the rebound on the 9th of February, 2010. Therefore, it is perfectly natural if profit taking should take place, and the contraction of the Bollinger Bands would signal a consolidation for the KLCI, and the Bollinger Middle Band shall serve as the dynamic support.

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