Technical View

The FBM KLCI fell by about 15 pts at the day-low but started to rebound when it was trading about 6 pts away from the critical 1,474-pt horizontal support line. The index even bounced back with marginal gains during the session but eventually ended the day with a loss of 0.27-pts. We can now analyze the index from a few perspectives. Firstly, we know that last Friday’s sharp 21.29-pt drop wrote off the possibility of the market extending its uptrend after cracking above the downtrend channel. With that, we know that the index is now more likely to trade or consolidate sideways at above the 1,474 pt-level. Another point to note is that yesterday’s market action once again signaled the importance of the 1,474 pt-level as a rather strong rebound as it emerged not far away from this horizontal support floor. Last but not least, we also know that failure to hold up the 1,474 pt-level is expected to cause technical damage. The 1,474 pt-level is a very essential level for the FBM KLCI. Should it be violated decisively, the market could succumb to panic selling pressure. As is portrayed in the above daily chart, including yesterday’s market action, this level has been tested four times and a break below it is expected to cause technical damage to the index’s near-term technical outlook. This breakdown might even eventually lead to a shift in its longer term trend. Anyhow, until the breakdown occurs, we maintain our bullish bias view. Immediate resistance is still seen at the 1,509-1,517-pt “Downside Gap” created last Friday while next resistance is situated at the 1,530 pt-level. To the downside, there is immediate support at the 1,490 pt-level, followed by the critical 1,474 pt-level.