Positive view remains intact despite yesterday decline. On Monday, the FSTI dipped 39.44 pts to close at 3,245.34 pts. It dropped below the previous 3,274-pt support level, which implies that the session was led by the bears. As a result, the index inched down its 3-week low, pointing to the continuation of the bearish bias we saw in the prior session. Nevertheless, as long as the FSSTI does not breach below the 3,191-pt mark, we believe that the bullish bias since July is still in effect.

Technically speaking, the index is merely taking a normal breather below the 3,338-pt mark. As long as no strong downside development is in sight, this implies that the bulls are still dominating market sentiment. Our positive view is also supported by the appearance of the “Bullish Divergence RSI” reversal pattern – suggesting a shift of trend towards the upside.

Towards the downside, we set the immediate support at 3,191 pts, or the low of 9 Jul’s “Bullish Harami” pattern. The following support is pegged at 3,113 pts, ie 19 Apr 2017’s low. Conversely, our immediate resistance is set at 3,274 pts, located at the high of 10 Jul. The following resistance is at the 3,338-pt threshold, located at the low of 4 Apr.

Source: RHB Securities Research - 14 Aug 2018