Maintain long positions. The FKLI ended the latest session in the positive territory. This was after it tested the immediate support of 1,766.5 pts with an intraday low of 1,766 pts, before rebounding and ending 3 pts higher at 1,774.5 pts. The session’s high was at 1,781.5 pts. We highlighted the appearance of the “Bearish Engulfing” formation in the prior report – which will be confirmed if the said immediate support is breached. Given the index is still able to close at above this point, this means the index’s positive bias since the low of 1,655 pts on 28 Jun is still valid. Hence, we are keeping our near-term positive trading bias.

The “Bearish Engulfing” formation is still not confirmed yet – if it happens, it would mark the end of the rebound that began from the low of 1,655 pts on 28 Jun. We therefore advise traders to keep to long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, a trailing-stop can be set at 1,766.5 pts.

Towards the downside, the immediate support is set at 1,766.5 pts, the low of 31 Jul. The second support is eyed at 1,740 pts, the low of 20 Jul. Towards the upside, the immediate resistance is at 1,800 pts, near the high of 7 Jun. This is followed by 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 6 Aug 2018