The market continued to consolidate for the third consecutive trading day. In fact, the consolidation phase has been very constructive considering that the market has gained some 85 pts over the last 18 trading days.
We have been saying the same thing since Monday - that it is logical to expect the index to start consolidating - but the market still has the potential to rally further without further consolidation despite weakness in the FBM KLCI over the last three sessions. This is because the index is showing no sign of reversing its strong upward momentum. Moreover, the daily RSI still closed below the overbought territory at the 80 pt-level.
The near-term technical outlook of the FBM KLCI will remain bullish as long as it stays at above the new uptrend line.
Immediate resistance is still seen at last Friday’s high of 1,441.8 pts, followed by the 1,445 pt-level, which is the index’s historic close charted in 2007. The psychological 1,500 pt-level would be the next resistance. To the downside, there is immediate support at the 1,431 pt-level, followed by the 1,422 pt-level.