FKLI: Eyeing Support At 1,623-Pt Level

Maintain long positions with a trailing-stop set below the 1,623-pt threshold. The FKLI ended lower to form a positive candle yesterday. It lost 15.50 pts to close at 1,637 pts, after oscillating between a high of 1,641 pts and a low of 1,629.50 pts. As yesterday’s candle failed to close below the 1,623-pt support mentioned previously, this indicates that the buying interest has not fully diminished yet. On a technical basis, as long as the gains from 28-29 Jan’s white candles have not been erased, this indicates that the near-term positive sentiment remains unchanged. Overall, we keep our positive view on the FKLI’s near-term outlook.

According to the daily chart, we are eyeing the immediate support level at 1,623 pts, near the lows of 28 Jan and 3 Feb. If a decisive breakdown arises, look to 1,591.50 pts – ie the previous low of 21 Jan – as the next support. To the upside, the immediate resistance level is maintained at 1,670 pts, near the midpoint of 4 Jan’s long black candle. The next resistance will likely be at 1,712.50 pts, which was the previous high of 30 Dec 2015.

Hence, we advise traders to stay long, following our recommendation of initiating long above the 1,622-pt level on 26 Jan. A trailing-stop can be set below the 1,623-pt threshold in order to minimise the downside risk.

FCPO: A Lacklustre Session

Buying interest still intact; stay long. The FCPO formed a “Doji” candle yesterday, closing at MYR2,567 after hovering between a high of MYR2,600 and a low of MYR2,560. Still, the near-term positive sentiment stays intact, as the commodity continued to trade above the MYR2,500 threshold. Yesterday’s “Doji” candle merely shows that the market may be taking a pause after the recent gains. With the rising 21-day MAV line, the FCPO’s near-term buying interest remains positive. Hence, we believe the rebound that started from 13 Jan’s white candle may persist.

Based on the current outlook, the immediate support level is maintained at the MYR2,500 psychological spot, near 31 Dec 2015’s high and 3 Feb’s low. The next support will likely be at MYR2,368, which was the previous low of 13 Jan. Conversely, the near-term resistance level is seen at the MYR2,600 round figure, followed by MYR2,630, which was the previous high of 15 May 2014.

Thus, we advise traders to stay long, since we previously recommended initiating long above the MYR2,485 level on 3 Feb. A trailing-stop can be set below the MYR2,500 mark in order to limit the risk per trade. Meanwhile, we also notice a downside development in the form of a bearish reversal sign, following the “Bearish Harami Cross” pattern. However, further confirmation is needed to validate the return of the bears.

Source: RHB Research - 11 Feb 2016