Bullish indicators suggest more potential upside moves. The FBMSC rose by 84.36 pts to close at 14,559.59 pts last Friday. This increase sent the index near the 14,578-pt resistance level, and the bullish bias is likely to be extended further. Should the FBMSC breach beyond this resistance point, this will be a good confirmation of the potential meaningful “Triple Bottom” reversal pattern. Overall, we believe that the bullish bias that started since April continues to exert itself.

The current momentum suggests that there is more positive follow-through in the coming sessions. Note that the index is now hovering firmly above the 50-day SMA line, which implies that market sentiment is encouraging. Furthermore, the appearance of the bullish reversal “Positive Divergence” pattern suggests a potential turnaround from the downside towards the upside. These positive indicators enhance our upside view.

The 13,649-pt mark, ie 30 May’s low, is maintained as our immediate support. This is followed by the next support at 13,116 pts, the low of 25 Aug 2015. Towards the upside, we keep the immediate resistance at 14,578 pts, or the high of 14 Jun. If this level is taken out, the following resistance is pegged at the 15,188-pt threshold, located at the high of 17 Apr.

Source: RHB Securities Research - 23 Jul 2018