Maintain long positions as the bullish “Piercing Line” formation still stands. The FKLI formed a white candle in the latest trading, reversing the early session’s losses to settle the day 2 pts higher at 1,693 pts. Intraday, the tone was encouraging as the index generally trended higher with the low and high posted at 1,673.5 pts and 1,694.5 pts. The strong intraday reversal indicates the bulls are re-emerging near the low of 25 Oct’s bullish “Piercing Line” formation. As mentioned, provided the said bullish formation is not invalidated, chances are high for the index to extend its rebound. Hence, we maintain our positive trading bias.

As technical evidence suggests the bulls are still in control over the index, we continue to recommend that traders stay in long positions – which we initiated at 1,718 pts or 2 Nov’s closing level. For risk management purposes, a stop-loss can be placed at 1,655 pts.

Towards the downside, the immediate support is pegged at the 1,655-pt level, the low of 28 June. The following support is at the 1,600-pt mark. Conversely, the immediate resistance is now expected at 1,749.5 pts, or the high of 17 Oct. This is followed by 1,779 pts, the high of 10 Oct.

Source: RHB Securities Research - 14 Nov 2018