Maintain long positions as the index is still in consolidation mode. The FKLI formed a black candle in the latest session. The index generally trended lower throughout the session – from a high of 1,801.5 pts to a low of 1,791 pts, before ending 7 pts lower at 1,791.5 pts. Despite the weak session, there is no sufficient evidence to suggest the occurrence of a price rejection from the 200-day SMA line, which currently coincides with the 1,800-pt mark. Instead, the price pattern developed over the past two months continues to suggest that the index is merely consolidating around the said level. Based on this, we maintain our near-term positive trading bias.

For now, provided the immediate support of 1,766.5 pts is not invalidated, 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.

We keep the immediate support target at 1,766.50 pts, or 31 Jul’s low. This is followed by 1,740 pts, the low of 20 Jul. On the other hand, the 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 - 3 Oct 2018