Maintain long positions, as bulls are trying to establish a stronger footing above the 200-day SMA. The FKLI formed a white candle in the latest session and closed at 1,798 pts, implying a gain of 11.5 pts – ie slightly above the 200-day SMA line (current reading:1,796 pts). The intraday trend was encouraging, as the index generally marched higher throughout the session and recorded a low and high of 1,788.5 pts and 1,799 pts. The positive session can be seen as a follow-up from the “Bullish Harami” formation that emerged on 13 Sep. In the near term, provided the immediate support of 1,766.5 pts is not breached, the positive trading bias should stay in place.

With the latest positive session reinforcing 13 Sep’s “Buliish Harami” formation – which indicates that the bulls will remain in control over the near term – 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.

Towards the downside, the immediate support is expected at 1,766.50 pts, ie 31 Jul’s low. This is followed by 1,740 pts, the low of 20 Jul. On the flip side, the immediate resistance is maintained at 1,810.5 pts, the highs of 9 and 10 Aug. This is followed by 1,828 pts, the high of 29 Aug.

Source: RHB Securities Research - 18 Sept 2018