FKLI: Still Positive

Stay long provided that the 1,623-pt support is not violated at the closing. The FKLI formed a “Doji” candle yesterday. Itsettled at 1,629.50 pts, after hovering between a high of 1,636 pts and a low of 1,625 pts. Based on the current outlook, we maintain our near-term positive sentiment, as the FKLI is still trading above the 1,623-pt support mentioned previously. As long as the gains from 28-29 Jan’s white candles have not been erased, this shows that the selling interest is still weak. Overall, we remain positive on the FKLI’s short-term outlook.

Based on the current outlook, the immediate support level is seen at 1,623 pts, near the lows of 28 Jan and 3 Feb. The next support will likely be at the previous low of 21 Jan, at 1,591.50 pts. On the other hand, we are eyeing the immediate resistance level at 1,670 pts, near the midpoint of 4 Jan’s long black candle. The next resistance is anticipated at 1,712.50pts, ie the previous high of 30 Dec 2015.

Therefore, we advise traders to stay long, given that we previously recommended initiating long above the 1,622-pt level on 26 Jan. Meanwhile, a trailing-stop can be set below the 1,623-pt level in order to limit the downside risk.

FCPO: Buying Interest Intact

Maintain long positions. The FCPO’s buying interest has continued as expected. A white candle was formed yesterday, pointing to a continuation of the upside move. During the intraday session, it rose to a high of MYR2,600 before ending at MYR2,596 for the day. The near-term positive sentiment stays intact, as the commodity has remained above the MYR2,500 support mentioned previously. In addition, the 14-day RSI indicator is now rising without being overbought. This, coupled with the rising 21-day MAV line, indicates that the positive sentiment has been enhanced.

According to the daily chart, we are eyeing the immediate support level at the MYR2,500 psychological spot, near 31 Dec 2015’s high and 3 Feb’s low. If a breakdown occurs, look to MYR2,368 – ie the previous low of 13 Jan – as the next support. On the other hand, the near-term resistance is maintained at the MYR2,600 round figure, followed by MYR2,630 – which was the high of 15 May 2014.

Hence, we advise traders to stay long, following our recommendation of initiating long above the MYR2,485 level on 3 Feb. A trailing-stop can be set below the MYR2,500 threshold in order to minimise the downside risk. Given 10 Feb’s “BearishHarami Cross” pattern, a trend reversal might be possible although further confirmation is needed to validate the market’s next move.

Source: RHB Research - 12 Feb 2016