Another rebound within the downtrend channel. The FBMSC continued to gain yesterday, and closed at 15,736.09 pts or 73.14 pts higher. It recorded a white candle after it hovering between a low of 15,701.39 pts and high of 15,787.68 pts. The chart above shows that the index has been increasing steadily for the past four sessions, and is now heading towards the resistance level of the downtrend line. However, until we see a firm breach above that downtrend line, we think that the overall 2-month weakness would stay intact.

Over the longer term, we believe that the previous upward rally from 17 Dec 2014 to 21 Apr 2015 is still in play. The current retracement that began on 22 Apt is around 43% of the >3,000-pt gain that was charted during that rally, indicating that the bulls’ strength has not been fully nullified.

We keep the 15,536-pt, ie 30 Jun’s low, as an immediate support, while the crucial support is at 15,209 pts, or 9 Jul’s low. On the flip side, the immediate resistance is pegged at 16,048 pts, ie 2 Jul’s high. Meanwhile, the next resistance is situated at the 16,293-pt mark, on the 100-day MAV line.

Source: RHB Research - 15 Jul 2015