Strong bearish bias sents the index to its near 7-week low, bearish view ahead. The FSSTI registered a 74.53-pt loss, after it opened low at 3,453.48 pts and closed at 3,443.95 pts yesterday. As a result, the FSSTI dropped firmly below the 100-day SMA line, and is currently situated near the 7-week low. This implies that the bears are firmly in dominance of market sentiment. In the daily chart above, we also highlight a “Downside Gap” continuation pattern, suggesting that the correction is likely to be extended further. This is supported by the fact that that 14-day RSI indicator has yet to hit the 30-pt oversold level, which suggests that there are still some space for the bearish bias to be extended.

Overall, we believe that market sentiment is more towards the bearish side. Note that our downside view was initially supported with the appearance of the last month’s “Negative Divergence” pattern – an indication that market trend has turned towards the downside, from upside.

After yesterday’s decline, we revise the immediate support to 3,443 pts, or 27 Mar’s high. Our next support is seen at 3,377 pts, ie 7 Dec 2017’s low. Towards the upside, our immediate resistance is set at 3,481 pts, derived from the low of 20 Mar. This is followed by the 3,522-pt resistance threshold, located at 8 May’s low.

Source: RHB Securities Research - 31 May 2018