The 14-day RSI indicator suggests that there is still room for the correction to be extended. The FSSTI ended yesterday’s session at 3,430.69 pts, marking a 11-pt loss. A black candle was formed after it hovered between a low of 3,428.54 pts and high of 3,449.40 pts. This shows that there was no follow-through of the momentum, which we observed in the longer lower shadow of the prior black candle. As a result, the index has dipped to its newest 1-week low. Overall, the bears are still in firm control of the market.

The daily chart above leads us to believe that the correction may lead the index to drop below the 200-day SMA line in the later sessions. This is supported by the 14-day RSI indicator being above the 30-pt oversold level, which suggests that there is still room for the downside movement to be extended further.

The 3,417-pt mark, ie 1 Jun’s low, is maintained as our immediate support. Should the FSSTI drop below this level, the following support is at 3,377 pts, or the low of 7 Dec 2017. Towards the upside, we set the immediate resistance at 3,478 pts, located at the high of 31 May. The next resistance is pegged at the 3,513-pt mark, or the low of 28 May.

Source: RHB Securities Research - 13 Jun 2018