KUALA LUMPUR: OSK Research said the FBM KLCI is heading towards the 50-day MAV line and the 100-day MAV line, which are the two crucial levels for the market.

Whether the market can reposition itself back above the 100-day MAV line, especially the 50-day MAV line, will have a major impact on the market’s nearer term outlook.

In its technical outlook on Friday, Feb 19, it said that after the 50-day MAV line was violated in January, it would not expect the key index to bounce back above this level anytime soon.

"It was the first and most critical breakdown experienced by the market since the rally started in March last year. Normally, when such a major breakdown occurs, it would eventually lead to a major shift in trend.

OSK Research said however, on its first trading day on Wednesday after the long holiday break, the FBM KLCI surprisingly broke above the short-term downtrend line and even once surpassed the 100-day MAV line during the session.

This breakout caught the research house completely off-guard. Nevertheless, it still thinks it is too early to change its view towards the nearer term outlook although the key index has taken out the short-term downtrend.

"We are still worried that the breakdown from the longer term trend lines, namely the 50-day MAV line and the 100-day MAV line, may signal a major trend shift. In the meantime, we maintain our bearish view towards the near-term outlook," it said.

OSK Research said the immediate resistance is still seen at the 100-day MAV line, which now lies at the 1,260-level, followed by the 50-day MAV line, which is currently at the 1,272-level. To the downside, an immediate support lies at the recent-low of 1,224.