Technical View

The market lost 4.44 pts last Friday but ended the day at above the key 1,488 pt-level. After two weeks of price action in the vicinity of 1,488 pts, we have identified a potential downtrend channel as is being portrayed in the above daily chart. This downtrend channel would be able to show us when the current consolidation phase will come to an end. The importance of the 1,488 pt-level has become increasingly obvious since the market has been trying to sustain a posture at above this level since the 28.2-pt drop on the 11th and 12th of this month.
This week, we will see if the index can actually hold up the 1,488 pt-level and eventually rebound back above uptrend line 2. At the current level, although the index has returned back above the 1,488 pt-level, it is still vulnerable to a pullback and possibly fall back towards uptrend line 1.

We are still waiting for the confirmation signal to see if uptrend line 2 has been decisively violated and would need to see a clean violation at the 1,488 pt-level to confirm it. We have seen many times in the last few months how the index experienced a very short retracement period after violating a short-term uptrend line. Hence, further confirmation is needed in order to gauge if the FBM KLCI would eventually retrace towards uptrend line 1.
Meanwhile, our view towards the near-term market has been the same, that is, its technical landscape will remain bullish as long as the index is still trading at above uptrend line 1.
We are still eyeing the 1,500 pt-level as the next resistance, followed by the 1,512-1,514 pt-area.
Immediate support is now seen at the 1,488 pt-level, followed by the 1,479 pt-level.