In its technical outlook on Friday it cautioned that the KLCI slipped below the 1,752 support level on Oct 17 to close at the lowest point since April 20 or almost six months. However, the 30-stock index was unable to immediately rebound in the next session.
“This is viewed as a short-term bearish development as it nullifies the unconfirmed bullish morning star reversal pattern detected on Oct 3.
“There is now a significant downside risk towards the next support level of 1,729. On a positive note, the daily RSI (14) level dipped below the 30-mark, indicating oversold condition of the index, particularly on further weakness. This suggest a potential technical rebound in the cards,” it said.
AmInvestment Research said the immediate support level is now at approximately 1,729. Recall that from the 1,616 support level experienced in late December 2016, the index climbed a net 179 points before facing resistance at 1,795 in June 2017.
The 61.8% Fibonacci retracement sits at approximately 1,727 – near the 1,729 level as well.
“Medium to longer term uptrend still intact. While the short-term downside risk increases from this bearish development, the index still has room to manoeuvre as the 50% Fibonacci retracement from Dec-16 to Jun-17 hovers at 1,705.
“The consolidation range may now be widened and prolonged, but the medium-term uptrend is intact. We reiterate that the long-term downtrend since 2014 has probably bottomed in 1Q17,” it said.