The positive outlook continues, as the bullish bias remains intact above the 13,719-pt mark. The FBMSC posted a 43.17-pt loss to 14,421.37 pts yesterday. This weak performance led the index near to the 14,389-pt support. Nevertheless, there is no change to our positive view, as no strong downside movement has occurred yet. As the FBMSC continues to hover steadily above the 13,719-pt support, this implies that the 8-week bullish bias is still exerting itself. Overall, the bulls are still dominating market sentiment.

We initially thought the recent correction during the January-March period was at the index’s limit – after the appearance of 5 Apr’s “Bullish Harami” and 6 Apr’s “Hammer” patterns. This is because we detected them at the FBMSC’s 2-year low, which makes the appearance significant. In June, we detected a reversal “Bullish Engulfing” candlestick pattern, followed by the important “Double Bottom” and “Bullish Divergence patterns. Technically speaking, more positive indicators enhance our view that the trend is shifting towards the upside from the previous downside move.

The immediate support is at 14,389 pts, or the low of 26 Apr’s “Bullish Harami” pattern. Should the FBMSC slip below this level, our next support is found at 13,719 pts, which was the low of 5 Apr’s “Bullish Harami” pattern. Towards the upside, we keep the immediate resistance at 15,188 pts, ie the high of 17 Apr. For the next resistance, look to 15,857 pts, which was the low of 6 Feb’s “Hammer” pattern.

Source: RHB Securities Research - 13 Jun 2018