Maintain short positions. The FKLI formed a long white candle in the latest trading and filled the downside gap of the prior session – indicating the session was under the bulls’ control. The index moved progressively higher for the session, from a low of 1,696 pts, before closing at the high of 1,733 pts, implying a gain of 27 pts. This is a follow up from the prior session’s bullish “Hammer” formation. With the said downside gap filled, the coming sessions’ price actions would be critical in defining the near-term trading bias. If the bulls manage to follow-up with a firm upside breach of the immediate resistance of 1,740 pts, chances are higher for the technical landscape to turn positive.

Until there are clearer signs that the bulls have regained control, we continue to recommend that traders keep to short positions – which we initiated at 1,737 pts, 10 Oct’s closing level. For risk management purposes, a stop loss can be placed above 1,779 pts.

The immediate support stayed at 1,686 pts, the latest session’s low. This is followed by 1,655 pts, which was the low of 28 June. Moving up, the immediate resistance is eyed at 1,740 pts, or 20 Jul’s low. This is followed by 1,779 pts – the latest session’s high.

Source: RHB Securities Research - 15 Oct 2018