As indicated by A, the FBM KLCI tested the 1325 WinChart Automatic Fibonacci Retracement, closing at 1326.45 points, upped 0.58 points. Support for the KLCI remains at 1325, a 76.4% retracement, and the resistance is at 1350 level.

As shown on the chart above, the Bollinger Bands contracted another 5%, suggesting that the KLCI is indeed consolidating, and the target of the consolidation or the correction is usually at the Bollinger Middle Band.

As indicated by B, total market volume declined 24.2%, with volume below the 40-day VMA level. This shows that the market participation is still low, thus it implies that the investors confidence is still low.

As indicated by C, the Stochastic stays above 70%, suggesting that the short term movement of the KLCI is still on the positive side. If the Stochastic should break below below 70%, it would be a signal suggesting a beginning of a technical correction.

In conclusion, the Bollinger Bands is suggesting a consolidation for the KLCI, and the consolidation of the KLCI is expected to carry on until the re-expansion of the Bollinger Bands. If the KLCI should remain above the Bollinger Middle Band, as the Bollinger Bands expands, the KLCI would have a chance to resume its positive movement.

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