Fluctuating within the downtrend channel; bulls are still struggling. Yesterday, the FBMSC inched up another 24.15 pts to close at 15,662.95 pts. It formed a small white candle with a long lower shadow after it oscillated between a low of 15,594.19 pts and high of 15,663.64 pts. However, the movement of the index is still fluctuating within the downtrend line, indicating that the overall 2-month weak sentiment is still pressuring it.

If the rebound momentum that we saw during 9 Jul continues, and is able to lead the index to close firmly above the downtrend channel, this may signal a potential ending to the current breather that has been on-going since 22 Apr. Over the longer term, we believe the upward development from 17 Dec 2014 to 21 Apr 2015 has not been fully negated. Our positive outlook is supported by the significant >3,000-pt gain during that rally.

Our immediate support remains at 15,536 pts, which was 30 Jun’s low, followed by the new critical support of 15,209 pts, ie9 Jul’s low. To the upside, our immediate resistance is maintained at 16,048 pts, ie 2 Jul’s high, while the next resistance is seen at the 16,293-pt mark on the 100-day MAV line.

Source: RHB Research - 14 Jul 2015