Previous immediate resistance cracked; initiate long positions. Yesterday, the FKLI performed positively, as it formed a white candle and successfully closed above the previous immediate resistance of 1,810.5 pts. The low and high were recorded at 1,805.5 pts and 1,816 pts, before closing at 1,812 pts, indicating 10-pt gain. As mentioned, the upside of the 1,810.5-pt mark likely signals the end of the recent weeks’ consolidation phase, and potentially leading to the resumption of an upward movement from the low of 1,655 pts on 28 Jun. This positive bias is also supported by the fact that the index is in a better position – above the 200-day SMA line. With this, we now switch to our near-term trading bias to positive.

Our previous short positions, which we initiated at 1,775 pts – the closing level of 13 Aug – were closed out at 1,810.5 pts in the latest session. With our new near-term positive bias, we initiate long positions at yesterday’s closing. For risk management, a stop-loss below 1,766.5 pts is advisable.

We revise the immediate support to 1,810.5 pts – the highs of 9 and 10 Aug. This is followed by 1,766.5 pts, the low of 31 Jul. Towards the upside, the immediate resistance is now expected to emerge at 1,844.5 pts, the high of 23 May. This is followed by 1,876.5 pts, the high of 14 May.

Source: RHB Securities Research - 28 Aug 2018