The FBM KLCI is now in the vicinity of the middle point of two reversal signals. While the key index is some 40 pts off the low seen last month after creating the “Bullish Engulfing”, the market is still
trading in bearish territory. In the meantime, we still believe that the recent rebound from the low of
1,243.86 pts is a bearish rebound after the major breakdown near the 1,320 pt-level.
Our view remains the same, i.e. the near-term technical outlook of the FBM KLCI is still firmly bearish. We saw the key index failing to crack above the 1,350 pt-level in three separate attempts over the last three months and the market eventually dipping below the significant support near the 1,200 pt-level. Such market action is usually viewed as a strong reversal signal.
Meanwhile, the market continues to face very tough resistance at the downside gap ranging from the 1,290 pt-level to 1,304 pts. Next resistance remains at the 1,307/1,308 pt-level. To the downside, we
are still looking at the 1,276-1,285 pt-gap area as the immediate support. Another gap area ranging from the 1,269 pt-level to the 1,276 pt-level would be the next support.
