FKLI: Closes Higher

Maintain long positions. The FKLI ended higher yesterday, closing at 1,649.50 pts after oscillating between a high of 1,656.50 pts and a low of 1,645 pts. Based on the current technical landscape, the buying interest has not diminished thus far, as the index managed to mark a higher close and formed an upside gap yesterday. This also implies that the posi tive sentiment stays unchanged. Furthermore, with the 14-day RSI indicator rising above the 50 reference point to record a bullish reading of 52.97 pts, the positive sentiment has been enhanced.

As shown in the chart, the immediate support level is seen at 1,623 pts, near the lows of 28 Jan and 3 Feb. The crucial support is maintained at 1,591.50 pts, which was the previous low of 21 Jan. On the other hand, we anticipate the immediate resistance level at 1,670 pts – near the midpoint of 4 Jan’s long black candle. If this level is taken out, look to 1,712.50 pts - ie the previous high of 30 Dec 2015 – as the next resistance.

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

FCPO: Upside Move Weakens

Stay long while setting a trailing-stop below the MYR2,550 support. Following the white candles of 11-12 Feb, a black candle emerged yesterday. The FCPO lost MYR47 to close at MYR2,592, off its high of MYR2,648 and low of MYR2,590. However, yesterday’s black candle can be viewed as a result of profit-taking activities after the recent gains. From a technical perspective, as long as the commodity does not erase the gains from 11-12 Feb’s white candles, this indicates that the positive sentiment stays intact. Overall, we keep our positive view on the FCPO’s near-term outlook.

Based on the daily chart, we are eyeing the immediate support level at MYR2,550, which was the low of 11 Feb. The next support will likely be at MYR2,508, near 31 Dec 2015’s high and 3 Feb’s low. To the upside, the immediate resistance level is seen at MYR2,648, ie yesterday’s high. If a breakout arises, the next resistance is seen at the MYR2,700 psychological mark.

Therefore, we advise traders to maintain long positions, since we initially recommended initiating long above the MYR2,485 level on 3 Feb. A trailing-stop can be set below the MYR2,550 mark in order to secure part of the gains.

Source: RHB Research - 16 Feb 2016