The bullish outlook remains intact, as no strong downside development is sighted. The FBMSC ended at 13,939.80 pts yesterday and posted a 25.16-pt loss. It left a black candle after hovering between a low of 13,882.89 pts and 13,997.38 pts. However, this does not negate our positive view, given that the index has managed to stay above the 13,719-pt support. As long as this mark is not taken out, we believe the bulls are still dominating market sentiment. Overall, the near 3-month bullish bias remains in play.

Our positive view is supported by the appearance of the FBMSC’s 2-year low reversal signals, ie 5 Apr’s “Bullish Harami” and 6 Apr’s “Hammer” patterns. In addition, we also highlight May’s “Double Bottom” and “Positive Divergence” reversal patterns. All these bullish signals enhance our upside view.

We keep the immediate support at 13,719 pts, which was obtained from the low of 5 Apr’s “Bullish Harami” pattern. Should the FBMSC slip below this level, our next support is pegged at 13,116 pts, which is located at 25 Aug 2015’s low. Conversely, our immediate resistance is set at 14,578 pts, or the high of 14 Jun. For the next resistance, look to 15,188 pts, ie 17 Apr’s high.

Source: RHB Securities Research - 4 Jul 2018