Maintain short positions until the “Piercing Line” formation is confirmed. The latest session saw the FKLI formed a white candle – indicating it was led by the bulls. Intraday, the index generally trended higher with the low and high posted at 1,692 pts and 1,708.5 pts, before settling 21 pts higher at 1,708 pts. The positive session can be seen as the bulls’ attempt to engineer a deeper rebound after the recent sharp decline, which saw the daily RSI reaching an oversold threshold. For now, for a deeper rebound to possibly emerge, the immediate resistance of 1,718 pts – needs to be breached decisively to confirm the “Piercing Line” formation that emerged on 25 Oct. Until this happens, we keep to our negative trading bias.

Pending confirmation of a deeper rebound developing, we continue to recommend that traders keep to short positions – which we initiated at 1,737 pts, or 10 Oct’s closing level. For risk management purposes, a stop loss can be placed at the latest session’s high ie 1,718 pts.

Towards the downside, the immediate support is maintained at the 1,655-pt level, the low of 28 June. The following support is at the 1,600-pt mark, a round figure. Towards the upside, the immediate resistance is revised to 1,718 pts, the low of the 22 Oct “Piercing Line” formation. This is followed by 1,749.5 pts, or the high of 17 Oct.

Source: RHB Securities Research - 1 Nov 2018