It looks like the market is weakening after creating the “Long Leg Doji” and “Doji Star”. Remember that these two candlesticks represent an indecisive market. After trending sideways for a few days, the index violated the steeper uptrend line, which we refer to as uptrend line 1 in our daily chart above. No doubt that the market’s strength has been weakening since creating the two indecisive candlesticks.
Meanwhile, yesterday’s retracement is still considered healthy as the market could still possibly be able to create another uptrend, as is being indicated above as uptrend line 2. The immediate technical outlook of the FBM KLCI remains bullish.
There is tough resistance at the 1,395 pt-level, while initial support is still seen at the 1,350 pt-level, followed by the 1,332 pt-level and 1,326 pt-level. The 1,350 pt-level represents the previous peak of the 2009-2010 rally. A dip back below this level might cause some panic selling in the market.