FBM KLCI : Extending Short-term Downtrend (OSK)

The FBM KLCI was consolidating at above the previous Thursday’s low of 1,552.7 pts following the breakdown from the short-term uptrend line. However, the index has now retraced marginally below the 1,552.7 pt-level after yesterday’s 6.26-pt pullback. The index had at one point fallen by as much as 13.2 pts during the session.

The fact that the index gapped down at the opening and closed 6.26 pts lower, as well as lost as much as 13.2 pts during trading, is a hint of market weakness after the short-term downtrend line was violated. We could see the market’s intention of extending the downtrend.

We have drawn a short-term downtrend line to give us an indication when the current retracement will come to an end. The index will basically continue to retrace until the short-term downtrend line is violated.

We have started to adopt a cautiously bullish view on the index’s near-term technical outlook after it violated the short-term uptrend line. This is because we are a bit cautious on the index’s current position as there is definitely a slight risk at the moment that the market may eventually retrace to the 1,474 pt-level. As we mentioned before, we would not be turning bearish even another 70-pt drop from the current level unless the index eventually violates the critical 1,474 pt-level.

From the current level, immediate support lies at the 1,545 pt-level, followed by the 1,525 pt-level. To the upside, resistance lies at the 1,555-1558 pt-area and the 1,567 pt-level.

(Chart extracted from ChartNexus)