Maintain long positions. The FKLI ended the latest session relatively unchanged, registering a low and high of 1,784 pts and 1,792 pts before closing 2.5 pts lower at 1,791 pts. While the index is now situated marginally below the 200-day SMA line, this is still not a decisive breakdown. If it happens, this may suggest that prospects of a deeper retracement are developing. Furthermore, the FKLI has not invalidated the previous low, ie the immediate support of 1,766.5 pts. Based on this, we maintain our near-term negative trading bias.

For now, we regard the recent weakness as a sign of a consolidation. As long as the immediate support is not invalidated, we continue to advise traders to maintain their long positions. For risk management purposes, a stop loss can be set below the 1,766.50-pt mark, in line with our long recommendation of 1,812 pts – which is also the closing level of 27 Aug.

Immediate support is pegged at the 1,766.50-pt mark, ie 31 Jul’s low. The following support may emerge at 1,740 pts, obtained from the low of 20 Jul. Towards the upside, the immediate resistance is set at 1,810.5 pts, which are the highs of 9 and 10 Aug. This is followed by 1,828 pts, the high of 29 Aug.

Source: RHB Securities Research - 12 Sept 2018