Strong bearish bias sent the index to its newest low since April. The FSSTI extended its downside movement, as it posted a 38.18-pt loss to close at 3,392.51 pts. It charted a black candle that breached firmly below the previous 3,417-pt support. This has sent the index to its latest low since April. We also note that the FSSTI is now situated firmly below the 200-day SMA line, which points towards a weak outlook. Overall, the bears are in firm control of market sentiment.

There was no surprise in yesterday’s weak performance, as we already saw much potential for the downside movement to emerge earlier. This was supported by the appearance of last month’s “Downside Gap” pattern, which suggested that the current correction is likely to be extended further. Moreover, the fact that the 14-day RSI was below the 50-pt neutral level shows that market sentiment is bearish. These negative indicators enhance our downside view.

After yesterday’s decline, we revise the immediate support to 3,377 pts, ie 7 Dec 2017’s low. This is followed by the next support at 3,338 pts, located at 4 Apr’s low. On the flip side, we set the immediate resistance at 3,417 pts, obtained from 1 Jun’s low. The next resistance is pegged at the 3,478-pt mark, or 31 May’s high.

Source: RHB Securities Research - 14 Jun 2018