Bearish view continues as no strong upside movement is in sight yet. Although yesterday’s session was led by the bears, the FSSTI ended the day at 3,411.69 pts, ie 5.32-pt higher from its prior close of 3,436.37 pts. As a result, it left a black candle with a longer lower shadow. This implies that momentum is accumulating above the 200-day SMA line. However, a further upside follow-through is needed in order to confirm that the trend has turned bullish. At this juncture, the bears still dominate market sentiment. This is also supported by the fact that the 14-day RSI indicator is fluctuating below the 50-pt neutral level, at 39.86 pts – an indication of weak market sentiment.

The FSSTI is still in a retracement mode. We highlight the appearance of last month’s “Downside Gap” continuation pattern, which suggests that the downside movement could still be extended in later sessions – which enhances our bearish view.

We set the immediate support at 3,417 pts, or the low of 1 Jun. If this level is taken out, the following support is at 3,377 pts, the low of 7 Dec 2017. On the flip side, the immediate resistance remains at 3,478 pts, or the high of 31 May. This is followed by the 3,513-pt resistance threshold, obtained from the low of 28 May.

Source: RHB Securities Research - 12 Jun 2018