“Bullish Harami” formation is confirmed; initiate long positions. Yesterday, the FKL formed a white candle, successfully broke above the previous immediate resistance of 1,766.5 pts, and filled the “Downside Gap”. As indicated in the chart, pointing towards a positive bias. The session’s low and high were recorded at 1,747 pts and 1,778.5 pts respectively, before the index closed at 1,777 pts to reflect a gain of 19.5 pts. The upside break of the said previous immediate resistance has confirmed the 31 May’s “Bullish Harami” formation. This suggests that the index’s recent steep retracement has likely ended, and it is now likely to post a deeper rebound to – at least – retest the 200-day SMA line. As such, our near-term trading call is now positive.

Our previous short positions, initiated at 1,804.5 pts or the closing level of 23 May, were closed out at 1,766.5 pts. We now initiate long positions at yesterday’s closing. To manage risks, investors can set the stop-loss at 1,735 pts.

We revise the immediate support to 1,735 pts, the low of 4 Jun. This is followed by 1,700 pts. Towards the upside, the immediate resistance is now at 1,816.5 pts, the high of 24 May. The second resistance is eyed at 1,876.5 pts, the high of 14 May.

Source: RHB Securities Research - 7 Jun 2018