Bulls are slipping from resistance levels; maintain long positions. Yesterday, the FKLI formed a black candle – as it generally slipped lower throughout the session, suggesting the bears were in the control. The low and high were 1,788 pts and 1,801.5 pts – and the index closed 7 pts lower, at 1,790 pts. The negative session took place after the index came close to testing both 1,800 pts and the 200-day SMA line, in the prior session. Based on the recent price actions, we note that both the 1,800 pts and the said SMA line are tough resistance levels for the bulls to overcome. The upward breach of these levels is needed to signal the extension of the uptrend. Nevertheless, we have also not spotted any price rejection signal which – if it happens – may point to a deeper retracement. Hence, we are keeping our near-term positive trading bias.

As the probability is tilted towards the extension of the upward move, we continue to suggest that traders remain in 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 – also the closing level of 27 Aug.

Immediate support is maintained at 1,766.50 pts, 31 Jul’s low. The following support is at 1,740 pts, the low of 20 Jul. On the other hand, immediate resistance is 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 - 28 Sept 2018