Maintain long positions. The FKLI ceased the latest session relatively unchanged, despite at one point coming close to testing the immediate support of 1,766.5 pts. The index ended 0.5 pts lower at 1,772 pts, with the low and high recorded at 1,768 pts and 1,777.5 pts. The latest session suggests that the bears are still lingering around the said immediate support. A firm downside break from this mark would likely signal a deeper retracement developing – it would signal a price rejection from the 200-day SMA line. Until this happens, we maintain our near-term positive trading bias.

Given that the bulls are still able to defend the said immediate support, we continue to suggest that traders remain in long positions. To manage risks, 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 continue to eye the immediate support at 1,766.5 pts, or 31 Jul’s low. The second support may emerge at 1,740 pts, the low of 20 Jul. Towards the upside, 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 - 10 Oct 2018