After another lackluster session, it has become apparent to us that a downtrend channel has been constructed and the FBM KLCI is still stuck within it. Remember that the downtrend channel is used to guide us as to when the consolidation phase will end. Hence, the market is still now in a consolidation phase.
Another key point to note is that the market is now trading not far from the Monday’s intra-day low of 1,474 pts which was the bottom for the 21.93-pt rebound when the FBM KLCI ended the day with a 3.9-pt gain. The candlestick printed that day was indeed a bullish reversal pattern but is yet to be confirmed as the market remains stuck within the downtrend channel. The 1,474 pt-level is a crucial level which the market must hold to avoid from falling much further.
At the same time, remember that we have also been talking about the importance of the 1,488 ptlevel which the market has been trying hard to defend over the last two weeks? The market closed below this level yesterday and it is very likely that it will succumb to heavy selling pressure if the crucial low of 1,474 pts is taken out too.
We are still maintaining our near-term bullish view towards the FMB KLCI as long as it continues to trade at above uptrend line 1.
From the current level, the 1,500 pt-level is the next resistance, followed by the 1,512-1,514 pt-area.
Immediate support is now seen at the 1,474 pt-level, followed by the 1,451 pt-level.