FBM KLCI : A Minor Rebound (OSK)

The FBM KLCI rebounded from the short-term uptrend line yesterday. Although it was a mere 2.57- pt gain, the rebound was very critical in sustaining the index’s posture at above the short-term uptrend line. Judging from the sharp slope of this short-term uptrend line, which we think is rather steep, it is likely that a break below the trend line may cause a sharp pullback on the day this line is violated.

Should the uptrend line be violated, we expect the index to face heavy selling pressure for a few trading days or even weeks. However, the violation may not necessarily alter our bullish view towards the near-term technical outlook. Firstly, it is a rather steep uptrend line, which means that the index’s current rate of climb may not be easy to maintain for long. Anyway, as it is just a less than 3-month old trend line, any violation will not signal a major breakdown.

Meanwhile, the index’s near-term technical outlook is firmly bullish as it continues to trade at above the uptrend line. From the current level, an immediate support lies at the 1,577 pt-level, followed by the 1,565 pt-level. To the upside, there is initial resistance at the 1,588 pt-level while next resistance is seen at the 1,597 pt-level.