As indicated by A, the FBM KLCI tested the L1 resistance line, and retreated on Thursday, losing 6.79 points or 0.5% to close at 1321.43 points. Support for the KLCI is found at 1300 to 1308 level while the resistance is at 1354 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands contracted 1%, implying that the KLCI might be having its technical correction. If the Bollinger Bands should contract further, the correction of the KLCI is expected to carry on, and the Bollinger Middle Band shall serve as the dynamic support, and it is also the first target of the technical correction.

As indicated by B, total market volume declined 15.2%, with volume below the 40-day VMA level. This suggests that the overall market participation is still insufficient, thus the KLCI is still lacking of the ideal uptrend condition.

As indicated by C, the Stochastic is still falling, but it has not broken below 70% level, therefore, the short term bullish signal remains intact. If the Stochastic should break below 70% level, it would be an end to the short term bullish signal.

In conclusion, the KLCI retreated after it tested the L1 line as investors took profit.Meanwhile, the Bollinger Bands might be contracting, suggesting that the KLCI would consolidate.

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