After closing higher 8 days in a row, and adding 56.44 pts during the process, the FBM KLCI finally snapped its winning streak yesterday. As a result, the uptrend extending from the low recorded on 12 Aug 2010 was also violated.
The market has retraced from the overbought territory while the daily RSI closed at the 71.7 pt-level yesterday. However, this does not mean that the index is not going to correct further from here. It has already violated the steeper uptrend line, which would normally lead to further weakness in the coming sessions.
Having said this, the near-term technical outlook of the FBM KLCI will remain bullish as long as the retracement does not violate the longer-term uptrend line as it is portrayed in the above daily chart. It is true that the 1,400 pt-level was not decisively violated as it happened after the index experienced seven consecutive days of gains. Now, look for the 1,400 pt-psychological barrier as the immediate resistance while next resistance is seen at the 1,436 pt-level. To the downside, there is initial support at the 1,395 pt-level, followed by the 1,377 pt-level.