On Tuesday, the KLCI fell 0.95 of a point, to close at 1359.71 points. The KLCI is having a sideways consolidation while the resistance remains unchanged at 1370 followed by 1400 level, and the support is at 1354 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands contracted another 17%, suggesting that the KLCI is still consolidating while preparing for its new movement. As indicated by A, the KLCI is now testing the Bollinger Middle Band. If the Bollinger Bands should re-expand, with the KLCI above the Bollinger Middle Band, the KLCI would resume its uptrend; however, if the Bollinger Bands should expand with the KLCI below the Bollinger Middle Band, it would be a bearish biased signal.

As indicated by B, total market volume declined 3.3%, with volume below the 40-day VMA level. Generally, when volume falls below the 40-day VMA level, it implies that the market participation is insufficient, but generally it is normal when the market is moving sideways, as investors are waiting for some clearer signal.

As indicated by C, the Stochastic fell below 50%, suggesting that the short term movement of the KLCI is still weakening. However, due to the contraction of the Bollinger Bands, the significane of the Stochastic signal is reduced.

In conclusion, the KLCI is still consolidating while waiting for a new signal. Technically, the immediate technical outlook is still on the positive side as the KLCI is still supported by the 14, 21, 31 EMA. Nevertheless, we shall watch the Bollinger Bands closely, for its re-expansion signal.

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